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KUALA LUMPUR (March 17): Permodalan Nasional Bhd (PNB) has decided not to accept the voluntary takeover offer (VTO) by Sunway Bhd for its 13.3% stake in IJM Corp Bhd, citing the offer’s valuation, small cash component, as well as IJM’s dividend prospects and long-term growth potential.
One of the country’s largest fund managers said on Monday in a statement that its board investment committee considered IJM’s intrinsic value versus the RM3.15 offer price and the potential future gain from the Sunway shares to be issued, relative to their issuance price.
It said the decision not to accept the VTO was made after a thorough, comprehensive and independent assessment, in accordance with PNB’s investment process and governance framework.
The evaluation was based on commercial considerations and guided by its fiduciary responsibility to act in the best interests of PNB unit holders, in line with its objectives and mandate.
PNB also emphasised that IJM’s market share price has long not reflected the company’s underlying value. Therefore, regardless of the outcome of the VTO, it stressed that IJM’s board of directors and management should prioritise efforts to unlock this value for the benefit of all shareholders.
It stressed that its decision should not be interpreted as guidance for other shareholders.
“It is not intended to convey influence or imply any expectation regarding how other IJM shareholders should decide. All IJM shareholders should make their own independent assessment.”
Last Friday, independent adviser M&A Securities advised IJM’s shareholders to reject the offer, saying it is not fair and not reasonable, as Sunway’s RM3.15 offer price represents a discount of up to 51% to its estimated valuation of IJM shares. In addition, the offer is unreasonable as IJM shares are liquid, allowing existing shareholders to continue participating in the company’s future growth without accepting Sunway’s proposal.
Government-linked investment companies (GLICs) collectively hold about 45% in the group, with none individually having a controlling block.
The Employees Provident Fund (EPF) has the largest stake with 20.52%, Retirement Fund Inc (KWAP) with 9.64%, Minister of Finance Inc-owned Urusharta Jamaah Sdn Bhd with 2.84% and Lembaga Tabung Haji with 1.47%.
Sunway’s takeover offer, announced in mid-January, is conditional upon it securing more than 50% of IJM’s voting shares, as well as approvals from Sunway shareholders and other conditions. Under the deal, Sunway is offering 10%, or 31.5 sen, in cash and 90% new Sunway shares, 0.501 new Sunway shares valued at RM5.65 each, for every IJM share held. This involves the issuance of about 1.76 billion new Sunway shares and a cash outlay of around RM1.1 billion.
IJM had earlier secured an extension to submit its independent circular on the takeover bid, with the offer now open for acceptance until April 6.
Sunway group founder Tan Sri Jeffrey Cheah has previously said that the group would walk away from the proposed acquisition if shareholders of the construction group do not accept the offer by the deadline.
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