Sunway shareholders grant 99.97% approval for IJM takeover as deadline nears
With near-total support, the focus shifts to remaining government-linked fund decisions
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[KUALA LUMPUR] Malaysian conglomerate Sunway Group secured near-unanimous shareholder backing for its IJM Corp takeover bid, with 99.97 per cent voting in favour at an extraordinary general meeting (EGM) on Thursday (Mar 26), clearing a key hurdle ahead of a looming acceptance deadline.
The approval comes less than two weeks before the Apr 6 deadline for the conditional voluntary offer, which now hinges on securing at least 50 per cent acceptance from shareholders of IJM.
Unveiled on Jan 12, the RM11 billion (S$3.5 billion) offer proposes to acquire all 3.5 billion outstanding IJM shares at RM3.15 apiece, comprising 90 per cent in new Sunway shares and 10 per cent in cash.
Thursday’s EGM also approved the issuance of up to 1.76 billion new shares to fund the transaction, alongside provisions that could lead to IJM’s eventual delisting if the takeover succeeds.
IJM shares closed on Thursday at RM2.37, trailing the offer price. The stock previously climbed 2.5 per cent to RM2.82 on Jan 15 following the takeover bid. Meanwhile, Sunway ended at RM5.23, down 0.2 per cent on the day.
Scale and integration
Sunway founder and executive chairman Jeffrey Cheah said that the merger would immediately create one of Malaysia’s largest listed companies.
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“If you put the two together, we would immediately be among the top 10 companies in Malaysia by market capitalisation,” he said, adding that the combined entity could reach about RM45 billion.
Sunway’s current market value stands at nearly RM36 billion, while IJM’s is about RM8.6 billion.
Cheah stressed that the deal is not an outright buyout. “This is not a cash acquisition. IJM shareholders will continue to participate in the future growth as part of a bigger Sunway group.”
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He added: “With our experience in property, retail and construction, we believe we can do better with IJM’s assets and unlock more value. We will not be stripping assets. We will evaluate everything carefully and use our experience to enhance value.”
Funding and deal rationale
Sunway’s non-executive co-chairman Idris Jala dismissed suggestions that the group would rely on IJM’s balance sheet to finance the deal. He said the 10 per cent cash component would be fully funded by Sunway’s own resources. “IJM has about RM2 billion in cash but more than RM6 billion in borrowings. Sunway, by comparison, has over RM6 billion in cash reserves,” he noted.
But acceptance hurdle remains.
Despite strong internal backing, the outcome now depends on IJM shareholders.
Malaysia’s state-owned fund manager Permodalan Nasional Berhad on Mar 13 declined to accept the offer for its 13.5 per cent stake, citing IJM’s intrinsic value and long-term prospects.
Other government-linked shareholders, including the Employees Provident Fund and Kumpulan Wang Persaraan, have yet to decide.
Cheah said that acceptances stand at just above 13 per cent so far, underscoring the gap to the 50 per cent threshold with about 10 days remaining. “There are still about 10 days to go… many shareholders wait until the last minute,” he added.
He said that Sunway has no intention of revising its offer. “If we do not get 50 per cent plus one share, we will walk away. We have already put our best offer on the table.”
Still, Cheah expressed confidence investors would back the deal. “If you are a shareholder in a company that is underperforming compared to another, would you not consider moving to a stronger platform? It is a no-brainer.”
Valuation debate persists
IJM’s board on Mar 13 urged shareholders to reject the offer after its independent adviser, M&A Securities, deemed the proposal “not fair and not reasonable”, valuing the company at up to RM6.48 per share.
A separate assessment by Rothschild & Co also placed IJM’s fair value above Sunway’s offer price.
IJM chief executive Lee Chun Fai has outlined plans to unlock value independently, including monetising parts of its land bank and potentially listing its construction and toll road businesses.
However, several brokerages have recommended accepting the offer, citing near-term earnings risks and uncertainty over IJM’s standalone plans.
Political and regulatory backdrop
The merger faces scrutiny over potential Bumiputera ownership dilution. While the Malaysian Anti-Corruption Commission and tax authorities investigated specific individuals at IJM, the company denied any corporate wrongdoing.
Sunway’s Cheah also confirmed Sunway has since received an MACC letter clearing the group of all involvement.
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