THE unique selling point of the takeover is the value offered, unlocking synergies and value creation that extend beyond the Group and building a national champion.
A commercial deal for an attractive vehicle as institutional reforms will also enhance Malaysia’s competitiveness. After the bigger picture let’s look at the other details.
The board of IJM Corporation Berhad has called on shareholders to reject an RM11 billion takeover offer from Sunway. An independent adviser determined that the proposed price undervalues the company between 46.1per cent and 51.4 per cent of fair value.
Thus, the offer is not fair and not reasonable and IJM shares are liquid, with a high average free float of over 80 per cent (Sunway: below 50 per cent).
Isn’t this familiar? Malaysia Airports Holdings Berhad's (MAHB) independent directors also rejected the “not fair and not reasonable” takeover offer in 2024 but the deal went through despite opposition from civil-society groups and minority shareholders and MAHB still cannot solve the old problems.
IJM shareholders have until April 6 to decide and is conditional upon approval of more than 50 per cent of its voting shares. Sunway would walk away if IJM shareholders do not accept the offer by the deadline.
The Offer is based on a forward price-to-earnings ratio of about 21.1 times, in line with IJM’s five-year historical average of 21.4 times and close to its net tangible assets value of RM3.17 per share.
The consideration for the Offer shall be satisfied 10 per cent in cash and 90 per cent via issuance of new Sunway shares at an issue price of RM5.65 per Sunway share/unit.
On March 10, Sunway shares touched a low of RM5.05 and this is already a loss situation. The volatility of Sunway share price is shown in the 52-week price range of between RM3.858 - RM5.978.
Late last year, a report showed at a price-to-earnings (P/E) ratio of over 30x, Sunway may be sending very bearish signals given that almost half of all companies in Malaysia have P/E ratios under 14x and even lower than 9x and it requires further investigation to determine if it's justified. Can the strong earnings performance persist?
On the other hand, IJM 3QFY2026 loss is mainly due to substantially higher unrealised foreign exchange losses of RM60.8 million.
The biggest contributors to the Sunway Group are the property development and property investment divisions.
The Madani government’s push for the Johor-Singapore Special Economic Zone fueled sales and land conversions to freehold. Construction benefited from infrastructure, data center projects, and a RM6 billion order book target.
The higher profit before tax in the quarter ended December 31, 2025 was mainly attributable to contributions from the newly acquired HLMCL Group, the recognition of negative goodwill of RM55.2 million arising from the acquisition and net fair value gains of RM9.1 million from asset revaluations.
As for dividends, Sunway paid approximately 1.11 per cent to 1.39 per cent as of early 2026, lower than some industry peers. IJM's annual dividend yield is in the range of 2.89 per cent to 3.46 per cent.
Further, the net asset value (NAV) per share is much higher for IJM. Sunway may have more in cash reserves but the gearing ratio for IJM is more favourable.
With a strong dividend track record, the Employee Provident Fund (EPF) received an average of RM50 million per annum over the last six years.
EPF’s current 9.54 per cent stake in Sunway yields approximately RM38 million only and will decline further after the takeover. Private individual shareholders of IJM are also EPF contributors and wouldn’t they expect better dividends from EPF?
The assets IJM currently owns are critical and strategically valuable infrastructures and are increasingly scarce. It has provided reliable returns to investors and once diluted; replacement is a near impossibility.
Sunway may seek to delist IJM since operating it as an unlisted company would provide greater flexibility for long-term strategic direction and would reduce compliance obligations.
In an environment where we call for more transparency, the last part of the sentence is very worrying.
Bear in mind, Sunway also has a construction group and how would it manage potential overlaps and conflicts and how to ensure that neither is advantaged when bidding for projects.
Delistings and privatisations is a form of value disruption unless they clearly lead to higher value creation in the overall market.
The enlarged group may be a national champion with the scale and capabilities to compete regionally but shouldn’t we prioritise domestic investments and consumption under current geo-political uncertainties?
Ultimately, the decision hinges on investors' assessment of current value versus future potential.
Before that, the company valuation must look at the long-term growth trajectory since current earnings often fail to capture future potential and competitive advantages.
The offer price should be on a comprehensive sum-of-parts and full assessment of IJM’s longer-term earnings potential and asset value.
Saying the RM3.15 offer price is “attractive”, since IJM’s share price has remained range-bound over the past decade, is a lazy way of doing valuation. Wonder whether IJM’s land bank has been revalued.
Despite the above issues, several brokerages suggested that shareholders accept Sunway’s proposal, citing near-term earnings risks and execution uncertainties surrounding IJM’s monetisation plans. Bear in mind the takeover offer is based on a lower point in IJM’s earnings cycle and it makes a good killing.
Given the above, who benefits from this transaction?
Yes, current IJM shareholders will remain with the larger Sunway group but the share price has dropped below RM5.65.
How about guaranteeing fulfillment on all the promises on value creation? The high P/E is not representative of its forecast growth that is lower than the wider market.
Further, if the takeover is successful, they will only have 20 per cent shareholding in the enlarged entity and would get just 20 per cent upside of all the promises.
Speaking at the launch of the Securities Commission Malaysia’s (SC) fourth Capital Market Masterplan (CMP4) recently, Prime Minister Datuk Seri Anwar Ibrahim said efforts to strengthen Bumiputera participation and Bumiputera-owned ventures would expand beyond Malaysia.
IJM may not be a privately-owned Bumiputera firm but is considered a government-linked company (GLC).
Anwar also wants to widen the pipeline of companies ready to enter Bursa to deepen the country’s capital market, and here we are reducing the number and limiting choices for investors.
As of March 2026, Government-linked investment companies (GLICs) collectively hold about 45 per cent in IJM and the Employees Provident Fund (EPF) is the largest shareholder.
Sunway said it will fund the cash portion of its proposed takeover using its own resources. Accounting-wise, when a company acquires 100 per cent shares, it becomes a subsidiary and the acquirer gains full control over the target's cash, assets, and liabilities.
Hopefully, the offer is not a game of poker where players bet on having the best five-card hand or bluff opponents into folding. Obviously, it is not the best offer and the money on the table is just a bait to avoid missing out on real potential profits or full value.
I also hope all parties, including financial advisers, will wake up and be more professional in carrying out their duties in the pursuit of excellence.
I wonder whether the minority shareholder watchdog group (MSWG) has a role to play here, to be the eyes of the unseen and voice of the unheard.
Kudos to the Malaysian Anti-Corruption Commission for a quick investigation and gave clearance for the proposed IJM takeover.
Finally, let’s not only do the right things but do things right, conduct ourselves in an honest, professional and ethical manner at all times.
What say you…
The views expressed in this article are the author's own and do not necessarily reflect those of Sinar Daily.