Sunway Berhad Proposes Conditional Voluntary Take-Over Offer for IJM Corporation Berhad: Key Details for Investors

Kuala Lumpur, 11 March 2026 – Sunway Berhad (“Sunway” or “the Company”) has officially issued a detailed circular to shareholders regarding its proposed conditional voluntary take-over offer to acquire all ordinary shares in IJM Corporation Berhad (“IJM”), excluding treasury shares. The offer, which is expected to have significant implications for both Sunway and IJM shareholders, will be decided at an Extraordinary General Meeting (EGM) scheduled for 26 March 2026 at 3:00 p.m.

Key Points of the Proposed Take-Over Offer

• Offer Price: The proposed offer values IJM shares at RM3.15 each. Consideration will be satisfied as follows:
  • 10% in cash (RM0.315 per share)
  • 90% in the form of new Sunway shares, issued at an issue price of RM5.65 each (approximately 0.5 Sunway share per IJM share)
• Shareholder Approval: The offer is subject to approval by Sunway shareholders at the EGM and also requires meeting the minimum acceptance condition by IJM shareholders.
• Timetable:
  • Last date and time for lodging proxy forms: 25 March 2026, 3:00 p.m.
  • EGM: 26 March 2026, 3:00 p.m.
  • First Closing Date for IJM shareholders to accept the offer: 6 April 2026
  • Expected completion: By Q3 2026
• Principal Adviser: Maybank Investment Bank Berhad is acting as the principal adviser for Sunway.

Strategic Rationale and Potential Share Price Impact

• Rationale: Sunway aims to create one of Malaysia’s largest property and construction conglomerates by combining its operations with those of IJM. The Board asserts that the merger will:
  • Enhance economies of scale and operational excellence
  • Broaden the capital base and improve financing capabilities
  • Leverage complementary strengths, especially in construction, property development, infrastructure, and healthcare
  • Position the enlarged group to benefit from growth trends in Malaysia’s infrastructure and healthcare sectors
• Premium and Valuation:
  • The offer price reflects a premium of 0.73% to 15.19% over the closing price and VWAMPs of Sunway shares up to the last trading day prior to the offer notice
  • Implied FY25 P/E Multiple for IJM: 27.4x (within the range of comparable companies)
  • Issue Price for Sunway shares: 2.4-2.5x Price-to-Book Ratio, deemed fair by the Board
• Financial Flexibility: By offering a significant share component, Sunway preserves cash and maintains gearing at an acceptable level, potentially increasing headroom for future investments and shareholder returns.

Risks and Shareholder Considerations

• Completion Risk: The offer is conditional on shareholder approval and the minimum acceptance condition. If not met, the offer lapses and all acceptances are returned.
• Financing and Integration Risks: Sunway will finance the cash portion through borrowings and/or internal funds, exposing the group to interest rate risk. Integration of business operations, alignment of processes, and achievement of synergies are not guaranteed and may take time.
• Non-Core Asset Disposal: Sunway does not currently plan major changes to IJM’s structure but may redeploy or dispose non-core assets as part of post-merger rationalisation.
• Minority Shareholder Impact: If Sunway does not secure full acceptance, certain post-merger restructuring initiatives may require minority shareholder or regulatory approval, which could delay or restrict value realisation.
• No Director/Related Party Conflicts: Sunway’s Board confirms that none of the directors, major shareholders, chief executive, or their connected parties has any direct or indirect interest in the offer.

Recent Financial Performance of IJM

• Group Net Profit FY25: RM467.3 million (attributable to owners: RM403.4 million)
• Dividends: Total dividends paid for FY24 and FY25: RM280.5 million; additional interim and special dividends for FY25 declared (6 sen per share in total)
• Gearing: IJM’s Group gearing ratio stands at 0.33x, with net debt of RM3.35 billion and capital & reserves of RM10.28 billion, positioning the group for further expansion
• Key Audit Matters: External auditors highlighted the complexity of revenue and cost recognition in construction contracts and property development, as well as impairment assessments for subsidiaries and development assets

What Shareholders Must Do

• Read the full circular and independent advice carefully before voting at the EGM
• Consider potential dilution versus expected value creation and the strategic benefits outlined by the Board
• Note that the offer is not conditional on any other pending exercise, but completion of the Sunway Healthcare Holdings Berhad (SHH) listing is expected by 18 March 2026
• Recognise that the transaction could move both Sunway and IJM share prices in the short and medium term, depending on acceptance level, integration success, and synergy realisation

Conclusion and Board Recommendation

The Sunway Board recommends that shareholders vote in favour of the take-over offer, citing strategic rationale, fair valuation, and expected long-term benefits for the enlarged group. The transaction is anticipated to be earnings accretive and to support prudent gearing levels post-completion. However, risks associated with integration, financing, and realising synergistic benefits remain, and shareholders should evaluate both the upside potential and the execution risks.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors are advised to read the official circular and consult their own financial advisers before making any investment decisions. The information herein is based on the latest available data as disclosed by Sunway Berhad and IJM Corporation Berhad. Past performance is not indicative of future results, and all investments are subject to risks.

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