This article first appeared in The Edge Malaysia Weekly on March 16, 2026 - March 22, 2026
IN its independent advice circular (IAC) to the shareholders of IJM Corp Bhd (KL:IJM) on the conditional voluntary takeover offer by Sunway Bhd (KL:SUNWAY) that was released last Friday, M&A Securities Sdn Bhd says the offer is not fair and not reasonable.
In the IAC, M&A Securities pegs a sum-of-parts (SOP) value of between RM5.84 and RM6.48 per IJM share, meaning that the RM3.15 per share offered by Sunway is a discount of between 46.1% and 51.4%. It also pegs IJM’s net assets at RM2.93 per share as at end-2025, indicating that the offer is a premium of only 7.5% to IJM’s net assets per share.
“Accordingly, M&A Securities advises the board to recommend that the shareholders reject the offer, and recommends that the shareholders reject the offer,” says the investment banking outfit.
M&A Securities highlights that the implied value of the consideration receivable by IJM shareholders who wish to accept the offer represents a discount of between 47.3% and 52.4% to the estimated value of between RM5.84 and RM6.48 per share derived from the SOP valuation.
The IJM board, meanwhile, unanimously recommended that the shareholders reject the Sunway offer as well. It is understood that another valuation sought by the company and undertaken by financial adviser Rothschild & Co Malaysia Sdn Bhd pegged a fair value of between RM4.80 and RM5.63 per IJM share.
M&A Securities’ SOP valuation takes into account the value of IJM’s six business segments, namely construction, property development, manufacturing and quarrying, infrastructure (toll highways), infrastructure (port) and investment holdings.
For the construction segment, it pegged an average price-earnings ratio (PER) of 25.5 times on the unaudited profit after tax (PAT) attributable to owners of its parent IJM Construction Group for the 12 months ended Dec 31, 2025. For property development, it employed the revalued net asset value (RNAV) methodology, arriving at a value of RM10 billion.
The SOP valuation puts IJM at between RM20.47 billion and RM22.7 billion, which translates into between RM5.84 and RM6.48 per share. Even after applying a 33% discount to the RM5.84 per share, the SOP valuation is still above Sunway’s offer of RM3.15 per share.
Sunway’s RM3.15 per share offer comprises 10% cash (31.5 sen) and 90% new Sunway shares (0.501 share at RM5.65 per share, which the counter was trading at when the offer was made, amounting to RM2.83).
Sunway’s share price closed three sen lower at RM5.14 last Friday, giving the company a market capitalisation of RM34.75 billion.
Sunway’s share price took a hit for a number of reasons, including Malaysian Anti-Corruption Commission chief commissioner Tan Sri Azam Baki’s statement that the anti-graft agency had opened an investigation paper on Sunway’s takeover offer for IJM. The stock also fell after the March 10 ex-date for the distribution of shares in Sunway Healthcare Holdings Bhd (KL:SUNMED) entitled to the shareholders of Sunway.
The IAC also pointed out that the directors of IJM nominated by substantial shareholders the Employees Provident Fund and Permodalan Nasional Bhd — Azhar Ahmad and Mazuki Abdullah @ Muhammad respectively — had expressed their dissent solely in their capacity as directors of IJM “and do not in any way represent the position or decision of EPF and PNB with respect to the offer, and should not be construed as a view or recommendation by EPF and PNB”.
EPF has a 20.52% stake in IJM while PNB, via its various funds, held 13.3% as at end-June last year. Other government-linked funds with equity interest in IJM include Retirement Fund Inc (KWAP) with 9.64%, Minister of Finance Inc-owned Urusharta Jamaah Sdn Bhd with 2.84% and Pilgrims’ Fund Board (TH) with 1.47%.
The Ministry of Finance told parliament last week that government-linked investment companies (GLICs) had 45% equity interest in IJM, when asked about the government’s assessment of Sunway’s proposed acquisition of the company.
The shareholdings of the GLICs are key as Sunway’s takeover notice on Jan 12 says the offer is conditional on Sunway holding in aggregate more than 50% of the voting shares in IJM, apart from getting the approval of Sunway shareholders and other conditions.
The Edge, quoting sources, reported in February that the GLICs were not keen to accept Sunway’s offer for IJM for a number of reasons, but mainly because the offer was perceived as low, especially considering the RM1.1 billion cash portion of the payout. IJM’s board highlights that Sunway’s cash outlay of RM1.1 billion is substantially less than IJM’s existing cash holdings of RM2.3 billion as at Dec 31, 2025.
“From a liquidity perspective, Sunway would effectively acquire IJM together with a net cash addition of approximately RM1.2 billion, which would accrue to the enlarged Sunway group rather than the existing IJM shareholders,” says the board.
Another sticking point is that the issue price of RM5.65 values Sunway at RM38.7 billion, inclusive of its 84% equity interest in Sunway Healthcare, which will be listed on Bursa Malaysia on March 18. Sunway is distributing 676.04 million Sunway Healthcare shares to existing shareholders via a dividend-in-specie, based on one Sunway Healthcare share for every 10 Sunway shares held. IJM shareholders are excluded from the dividend-in-specie.
IJM’s board adds that it is “of the view that several of IJM group’s business segments have reached a level of operational maturity, earnings visibility and strategic positioning that can support independent capital market value realisation, while IJM’s ongoing transformation strategy provides additional medium- to long-term growth. The board believes that such embedded and future shareholders’ value is not reflected in the offer and, coupled with integration risks and strategic alignment arising from the combination with Sunway, may introduce execution uncertainties and disrupt or dilute the execution of IJM’s existing growth strategy and its medium- to long-term value creation trajectory”.
The board says the implied exchange ratio between IJM and Sunway shares under the existing offer of 0.501 Sunway share for one IJM share is significantly lower than the implied exchange ratio of 1.06 based on the midpoint of the estimated value of IJM shares at between RM5.84 and RM6.48, which is RM6.16.
Last Friday, IJM’s share price shed 11 sen or or 26.73% to end trading at RM2.32, giving the group a market capitalisation of RM8.13 billion.
While the general consensus has been that Sunway’s offer for IJM is low, a message being circulated takes a jab at the valuation. M&A Securities’ valuation for IJM reads more like the song “I Believe I Can Fly” than a grounded financial model, says a market observer.
“While we respect a non-consensus view, valuations must still be anchored in reality … If I were an IJM shareholder, frankly, I would surrender my shares to the [Sunway] offer without hesitation. Value is rarely unlocked by possibility. It is unlocked by execution and talent … In markets as in life, ‘if only’ rarely compounds shareholder value.”
Sunway’s offer for IJM expires on April 6.
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