The deal, announced on Monday, would see two of Malaysia’s leading construction and property players merge into a single company valued at nearly RM50 billion.
Here are some things to know about Sunway, IJM and the proposed takeover.
Both Fortune Southeast Asia 500 companies
Sunway ranks among Malaysia’s largest conglomerates, with operations spanning construction, education, healthcare, infrastructure and real estate. It employs about 16,000 people across 13 business divisions and 50 locations worldwide.
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A view of Sunway City Kuala Lumpur in Selangor, Malaysia. Photo from Sunway Property & Facility Management’s website |
IJM, formed in 1983 through the merger of three Malaysian construction companies, has a diversified portfolio covering construction, property and infrastructure. Its projects include major highways and bridges across Malaysia, such as the West Coast Expressway.
Both companies feature on Fortune’s Southeast Asia 500 list of the region’s largest firms by revenue. Sunway placed 190th with revenues of $1.7 billion in 2024 while IJM ranked 228th with $1.3 billion.
Combined, the two would have $3 billion in 2024 revenues, enough to lift the merged group past property giant Gamuda to around 120th on the ranking, according to U.S. magazine.
Based on last week’s closing prices, Sunway had a market capitalization of RM37.9 billion, compared with RM9.6 billion for IJM.
IJM controls a land bank of 1,342 hectares with a potential gross development value of RM45.1 billion. These figures are 959 hectares and RM73 billion for Sunway, The Business Times reported.
Cash-and-share deal
Sunway is offering RM3.15 for each IJM share, comprising RM0.315 in cash and 0.501 newly issued Sunway shares priced at RM5.65 apiece.
Based on this structure, an investor holding 1,000 IJM shares would get RM315 in cash along with 501 Sunway shares worth RM2,835, according to The Edge Malaysia.
To proceed, the deal must be accepted by over 50% of IJM shareholders and gain approval from Sunway’s shareholders at an extraordinary general meeting set for March, as well as regulatory clearance from relevant authorities.
The merger is expected to be completed by the third quarter of this year. Sunway said it may move to delist IJM after the takeover.
Brokerage UOB Kay Hian warned that the deal’s share-swap component is more complex than an all-cash offer and may dampen acceptance, especially among investors seeking upfront payouts.
What analysts say about the deal
Hong Leong Investment Bank said the RM3.15 offer is reasonable given IJM’s five-year average price-to-earnings and price-to-book multiples, even though it sits below the bank’s RM3.40 target price.
It added that IJM’s shares had traded above the offer price on only 22 days over the past five years, as quoted by the New Straits Times.
Brokerage TA Securities said the proposal values IJM above its historical averages, giving shareholders an opportunity to “monetize IJM at a fair multiple” without waiting for a sector re-rating.
RHB Research took a similarly positive view but added that IJM shareholders might want a higher cash component.
However, Kenanga Research has urged IJM shareholders to reject the bid as the offer price is lower than its target of RM3.40. It also said the share-swap component overvalues Sunway.
Kenanga analyst Teh Kian Yong said that although the merger offers operational synergies, the financial terms fall short of reflecting IJM’s intrinsic value.
The man behind Sunway
Sunway is controlled by its 80-year-old founder and chairman, Cheah, together with his family. According to the group’s website, he holds a combined direct and indirect stake of 59.4% in the conglomerate.
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Jeffrey Cheah, founder and chairman of Sunway Group. Photo from the company’s website |
Cheah ranked ninth on Forbes’ Malaysia 50 Richest list last April and was also named among the magazine’s Asia philanthropy heroes last month. His current net worth is estimated at $4.6 billion.
Born in Pusing, a former mining town in Perak, Cheah studied in Australia before returning to work as an accountant in Malaysia.
He founded Sunway in 1974 as a modest tin-mining operation. He later acquired a piece of mining land in Selangor to work on but instead opted to rehabilitate the land.
That site eventually turned into Sunway City Kuala Lumpur, Malaysia’s first green and sustainable township and one of the group’s flagship projects. From there, Sunway expanded steadily into the giant it is today.
Post-merger entity to be a ‘national champion’
In a stock exchange filing, Sunway said: “The successful completion of the proposed offer will establish an enlarged conglomerate involved in property development and construction in Malaysia which, based on revenue and asset base, would create a national champion.”
Chong Tjen San, director at financial services provider CGS International, said the acquisition would address key gaps in Sunway’s portfolio, particularly through IJM’s large-scale townships in the Klang Valley and the Light City project in Penang.
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IJM Bayouri township in Penang, Malaysia. Photo from IJM’s website |
He added that the deal would also broaden the group’s exposure via IJM’s industrial properties, U.K. operations and toll road concessions, among others.
Other analysts have cited the potential upside of the larger merged entity as a reason for IJM shareholders to accept the deal. Hong Leong said the merged entity would rank as the country’s eighth-largest company by market capitalization.
Shares of both companies were suspended on Monday pending the announcement. Trading resumed on Tuesday, with IJM slipping 0.36% to RM2.74 while Sunway rose nearly 1% to RM5.65.
