Sunway’s IJM takeover bid lapses after falling short of acceptance threshold

[KUALA LUMPUR] Sunway’s RM11 billion (S$3.5 billion) takeover bid for IJM Corp failed after falling short of the minimum shareholder acceptances by the Apr 6 deadline, scuttling one of Malaysia’s largest proposed mergers.

Maybank Investment Bank, the principal adviser and filing agent for the deal, said that Sunway secured acceptances for 33.43 per cent of IJM shares as at 5 pm on Monday (Apr 6), the closing date of the offer.

The conditional voluntary offer missed the minimum 50 per cent acceptance threshold required to proceed, bringing an end to Sunway’s attempt to take control of the construction and property group.

In a statement on Monday evening, Sunway said that it respected the decision of IJM shareholders and the outcome of the process, reiterating that its proposal was guided by a clear and consistent principle to create long-term, strategic and sustainable value.

“We respect the decision of IJM shareholders and the outcome of the process. In any transaction of this scale, differing perspectives are natural, and we acknowledge the robust public discourse that has accompanied the offer,” noted Sunway.

In a separate statement, IJM managing director and chief executive officer Lee Chun Fai said that the company will move forward with resolve, focusing on executing its strategy and unlocking value across its core businesses.

“Our priority now remains... execution and unlocking the value of the portfolio we have built,” he pointed out, adding that IJM’s fundamentals remain underpinned by a record RM17.3 billion order book and a strong track record in delivering national infrastructure and driving economic development.

The company said it remains confident of delivering on its strategic priorities across its construction order book, property development pipeline, infrastructure concessions and overseas expansion.

At Monday’s close, IJM shares rose 2.2 per cent to RM2.36 – still below the offer price – on volume of about 5.6 million shares. Sunway shares fell nearly 1 per cent to RM4.99, with around 6.6 million shares traded.

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Unveiled on Jan 12, Sunway’s offer sought to acquire all 3.5 billion outstanding IJM shares at RM3.15 apiece – a 28 per cent premium to the then market price. The deal comprised 1.76 billion new Sunway shares and RM1.1 billion in cash.

The proposed merger aimed to combine two of Malaysia’s largest developers into a powerhouse with a market value approaching RM50 billion.

Sunway had repeatedly described the offer as fair and reasonable, arguing that the merger would unlock IJM’s asset value and create a stronger national champion.

It also secured near-unanimous shareholder approval (close to 100 per cent), at its Mar 26 extraordinary general meeting, to proceed with the acquisition.

However, the proposal failed to win support from key institutional shareholders. Permodalan Nasional (which holds about 13 per cent of IJM) and the Employees Provident Fund (which holds 20.5 per cent stake) rejected the offer on Mar 16 and Mar 30 respectively, citing concerns that the price did not reflect IJM’s intrinsic value.

The failed bid follows weeks of resistance from IJM’s board and major shareholders. On Mar 13, IJM advised shareholders to reject the offer after independent adviser M&A Securities deemed it “not fair and not reasonable”.

M&A Securities valued IJM at between RM5.48 and RM6.48 per share based on a sum-of-parts analysis – well above Sunway’s offer price. Separately, Rothschild & Co estimated IJM’s fair value at between RM4.80 and RM5.63 per share.

Lee had earlier outlined plans to unlock value independently, including monetising parts of IJM’s land bank and potentially listing its construction and toll road businesses.

Despite mounting opposition, Sunway maintained that its proposal was its “best and final” offer and ruled out any revisions.

Founder and chairman Jeffrey Cheah had said the group was prepared to walk away if the acceptance threshold was not met by the deadline.