KUALA LUMPUR (Jan 12): Sunway Bhd (KL:SUNWAY) plans to acquire rival company IJM Corporation Bhd (KL:IJM) in a cash-and-share deal worth over RM11 billion.

Under the terms of the proposed deal, each 1,000 shares of IJM Corp entitles its holder to RM315 in cash and 501 Sunway shares worth RM2,835. If successful, the combined entity would rival Malaysia’s largest construction firm by revenue Gamuda Bhd (KL:GAMUDA).

The proposed acquisition of IJM Corp is due to the need for a company with the size to tap into the rising investment activities in Malaysia, said Sunway president Datuk Anuar Taib at a briefing on Monday.

“With the change of the global dynamics and economy, there will be a lot of investment into Malaysia,” Anuar said. “Scale usually helps in availability of financing and capabilities we can bring forward.”

The deal comes at a time of 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 centres and demand for industrial properties sweeping across Malaysia.

The offer price represents a gain of 14.55% on the last price of IJM Corp 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.

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 customary closing conditions. Sunway does not intend to maintain the listing status of IJM Corp if the shareholding rises to 75% and will invoke its rights to compulsory acquisition once its control crosses the 90% mark.

The transaction is expected to be completed by the third quarter of 2026, according to Sunway's timeline.

UBS AG has been appointed as international financial adviser, and Maybank Investment Bank is the principal adviser to Sunway.

Combined, the two companies would own massive swaths of land in the country with potential gross development value reaching 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. “It effectively doubles the scale of the business.”

For now, existing businesses of IJM Corp will be maintained as separate subsidiaries in parallel with the other operating companies within Sunway until the integration is completed. Rationalisation may also entail 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.

Further, both are blue chip stocks widely owned by institutional investors, and the enlarged entity will draw in even more investors and lower financing costs with larger capitalisation and better credit strength, said Teh.

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