The proposed acquisition of IJM Corp is driven by the need for a company of sufficient size to tap into rising investment activity in Malaysia, said Sunway president Datuk Anuar Taib at a briefing on Jan 12.
“With the change of the global dynamics and economy, there will be a lot of investment into Malaysia,” Anuar said. “Scale usually helps in the availability of financing and the capabilities we can bring forward.”
The deal comes at a time of an influx of foreign and domestic investments. Sunway and IJM Corp — which operate similar businesses in property, construction, and building materials — have benefitted from a wave of data centre development and rising demand for industrial properties sweeping across Malaysia.
The deal The offer price represents a 14.55% gain over IJM Corp’s last price of RM2.75 per share, before the stock was suspended for the announcement. The price is also a 17.59% premium to the six-month volume-weighted average market price of RM2.68 per share.
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The total deal value of RM11 billion values IJM Corp at an enterprise multiple of nearly 12 times and about 27 times the trailing earnings. The offer will become valid once Sunway secures more than 50% ownership of IJM Corp and the customary closing conditions are satisfied.
Sunway does not intend to maintain IJM Corp’s listing status if its shareholding rises to 75% and will invoke its right of compulsory acquisition once its control exceeds 90%. The transaction is expected to be completed by 3Q2026, according to Sunway’s timeline.
UBS has been appointed as the international financial adviser, and Maybank Investment Bank is the principal adviser to Sunway.
See also: Sunway to acquire IJM Corp in RM11 bil cash-and-share deal
From left: Sunway Bhd chief financial officer Clement Chen, president Datuk Anuar Taib, chief adviser Tan Sri Chew Chee Kin and deputy president Evan Cheah at the company’s media briefing on Jan 12 (Photo: Suhaimi Yusuf/The Edge Malaysia)
Enlarged entity
Combined, the two companies would own large tracts of land in Malaysia, with a potential gross development value of RM118.1 billion.
Outstanding construction jobs on hand, meanwhile, will swell to RM13 billion.
“We will be creating a true national champion and with the skill, capability and network to compete regionally,” Sunway head of investor relations Crystal Teh said at the same briefing on Jan 12. “It effectively doubles the scale of the business.”
For now, IJM Corp’s existing businesses will remain separate subsidiaries alongside the other operating companies within Sunway until the integration is completed.
Rationalisation may also entail the redeployment or disposal of non-core assets. However, Sunway is betting on the combination to “unlock synergies and value creation that extend beyond the group and also for the nation”, Anuar remarked.
Furthermore, both are blue-chip stocks widely held by institutional investors, and the enlarged entity will attract even more investors and lower financing costs with a larger capitalisation and stronger credit profile, said Teh.
Analysts question offer price
Analysts are generally positive about Sunway Bhd’s takeover of IJM Corp, citing earnings growth and diversification into infrastructure, though some question the offer price.
CGS International, in a note, said the deal could boost Sunway’s credibility and narrow its holding company discount after Sunway Healthcare Group Bhd’s expected listing in 1Q2026.
It estimated that, on a pro forma basis, the combined entity would have total assets of RM53 billion, up 69% from Sunway’s current level, and shareholders’ funds of RM26 billion, up 64%.
Total net debt would be RM13 billion, with a net gearing of 0.5 times.
Its Malaysian order book would reach RM14.8 billion (+131%), the land bank would expand to 5,685 acres (+140%), and the gross development value would total RM118 billion (+99%).
Hong Leong Investment Bank Research (HLIB) expects the acquisition to lift Sunway’s earnings per share by 17.8% on a pro forma basis for FY2026 ending Dec 31, excluding synergies, supported by Sunway’s higher valuation multiple and IJM’s sizeable construction and infrastructure assets.
In a separate note, CIMB Securities said the transaction is positive for Sunway, highlighting diversification into infrastructure assets such as toll roads and ports, and operational synergies across property and construction.
It said it sees the deal only being marginally earnings-accretive for Sunway under both minimum and full acceptance scenarios.
However, it noted that the RM3.15 offer price represents a 12.5% discount to IJM’s target price of RM3.60.
Meanwhile, MBSB Research said the acquisition would modestly improve post-consolidation earnings by about 1% and lower net gearing to around 0.5 times due to the enlarged equity base.
RHB Investment Bank highlighted that the enlarged group would gain scale, deeper infrastructure exposure, and stronger execution, making Sunway a more diversified play on domestic growth over the medium to long term.
It added that Sunway will have one fewer major competitor in the construction industry, positioning its separately listed subsidiary Sunway Construction Group Bhd to be in a stronger position when bidding for new projects.
In contrast, Kenanga Research said the RM3.15-per-share offer could be a hurdle, as IJM shareholders may be inclined to reject it. The price is 7% below IJM’s target price of RM3.40 and may not fully reflect the value of its infrastructure assets and earnings potential.
The research house added that the limited cash component and high Sunway share issuance may not entice IJM shareholders to accept the offer.
HLIB and RHB maintained their “buy” calls on Sunway, while MBSB and CIMB kept their “hold” ratings. Kenanga maintained its “underperform” call on the stock.
There are now three “buy”, nine “hold” and one “underperform” calls on the counter, according to Bloomberg. The average 12-month target price is RM5.71 a share.
This story first appeared on theedgemalaysia.com
