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KUALA LUMPUR (March 16): IJM Corporation Bhd (KL:IJM) said a takeover bid now on the table reflects the low point in its earnings cycle as the company urged shareholders to reject the offer.
The construction-and-infrastructure company is in a period where several major assets are still in development or incubation stages and have yet to fully produce earnings, group chief executive officer Datuk Lee Chun Fai (pictured) said at a briefing about an independent adviser’s findings on the offer by Sunway Bhd (KL:SUNWAY).
“As we speak, we are at a low in our earnings cycle, but the value of our assets is high,” he said.
M&A Securities, appointed to advise shareholders on the takeover offer, concluded that the offer by Sunway should be rejected for being “not fair and not reasonable”.
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IJM’s plans to list toll assets offer alternative to Sunway takeover in unlocking value — analysts
In January, Sunway launched an offer to acquire IJM in a cash-and-share deal that values the property-and-infrastructure company at RM3.15 per share or RM11 billion. The offer is conditional upon acceptance of 50% plus one share.
Under the terms of the proposed deal, each 1,000 shares of IJM entitles its holder to RM315 in cash and 501 Sunway shares worth RM2,835.
Opportunities
Lee highlighted that IJM still has opportunities to unlock shareholder value over the near to mid term. Among the key initiatives under consideration are the rationalisation of IJM’s India portfolio, potential listing of the construction business, and sale or listing of the toll road assets.
The measures, according to Lee, could help narrow the gap between IJM’s market valuation and the intrinsic value of its businesses. “We believe the immediate plan for these initiatives can be executed within two years,” he said.
IJM plans to exit its India operations over the next two to three years, including monetising its two toll road concessions and disposing of three developments as well as its land bank, as part of efforts to simplify the group’s structure and reduce exposure to foreign exchange volatility.
The company is also exploring the potential listing of its construction division, which Lee said has reached sufficient scale to operate as a standalone contractor since the business generates about RM3.6 billion in annual revenue.
The construction division has outstanding jobs worth about RM7.9 billion, near the upper end of its RM6 billion to RM8 billion target range, with a tender pipeline of around RM17 billion.
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