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KUALA LUMPUR (March 30): The Employees Provident Fund (EPF), the single largest shareholder in IJM Corporation Bhd (KL:IJM) holding 20.52%, has decided to reject an offer by Sunway Bhd (KL:SUNWAY) for its shares in the construction giant.
Sources said the EPF's investment committee had deliberated on Sunway’s offer recently and decided to turn it down on the grounds that the price did not reflect the intrinsic value of IJM.
“The committee felt that the offer did not value the potential of IJM and the possibility of the monetization of assets. The committee also felt that the EPF, being the single largest shareholder in IJM, should be able to do more to extract value from its investments in the construction giant,” said a source.
The EPF will be the second government-linked investment fund that rejects Sunway's takeover offer for IJM, after Permodalan Nasional Bhd (PNB), which holds 13.3%.
On March 16, PNB announced that the investment committee decided not to accept Sunway’s offer based on IJM’s intrinsic value and potential future gain from Sunway’s shares, relative to the issue price.
Read also:
EPF abstained from voting on Sunway's takeover offer for IJM
Apart from the EPF and PNB, the Retirement Fund Inc and Lembaga Tabung Haji have interests in IJM.
Government-linked investment funds collectively hold close to 49% of IJM. On March 2, The Edge had reported that the government-linked funds were not keen on Sunway’s offer and were likely to reject the deal.
Sunway has justified the offer of RM3.15, stating that it was consistent with the weighted average target price of RM3.24 for IJM from 14 independent research houses. It also had said that the offer price gave an implied price-earnings multiple of close to 27.4 times IJM’s earnings for the year ended March 2025.
Sunway's takeover offer has given a push to IJM to speed up monetisation of assets; the construction giant has alluded to the potential listing of the construction business and highways, as well as the possible divestment of the India toll concessions business.
IJM, with an order book of RM15.3 billion as at end-December last year and cash of RM2.3 billion, has been underperforming relative to other construction companies such as Gamuda Bhd (KL:GAMUDA) and Sunway Construction Bhd (KL:SUNCON).
On Jan 12, Sunway, which is a diversified conglomerate with interests in property, construction, education and healthcare, made an offer of RM3.15 per IJM share to be settled through an exchange of shares and cash. The cash portion is 10% of the offer price while Sunway will pay the rest in shares issued at RM5.65 each.
Last week, Sunway shareholders approved the deal. The EPF abstained from the voting on the proposal as the provident fund stated it had shares in both IJM and Sunway.
Even though Sunway has obtained the approval of shareholders, the offer is conditional upon Sunway getting more than 50% of IJM. So far, the acceptance level is just below 13% with the first closing date for the offer on April 6.
Sunway has 60 days to complete the offer from the time of dispatching the offer documents, which means the offer may be extended.
Following Sunway’s offer, IJM commissioned two independent valuations, which valued the company at a price that is way above the offer of RM3.15 per share.
M&A Securities valued IJM shares at between RM5.84 and RM6.48 while RothschildCo Malaysia Sdn Bhd, which was engaged by the board, tagged the value of the company at between RM4.80 and RM5.63.
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