KUALA LUMPUR (Jan 14) — Shares of Sunway Bhd and IJM Corporation Bhd ended Tuesday on a mixed footing as investors assessed the implications of Sunway’s proposed RM11 billion acquisition of IJM, alongside the group’s upcoming healthcare listing.
IJM closed one sen lower, or 0.36%, at RM2.74, valuing the construction and infrastructure group at approximately RM9.99 billion. The stock had earlier climbed to a four-month high of RM2.97 before retreating, after analysts highlighted that the RM3.15 per share offer was less attractive than initially perceived.
Sunway, meanwhile, gained five sen or 0.89% to close at RM5.65, lifting its market capitalisation to RM38.45 billion. The counter briefly touched RM5.71 before easing towards the close.
Despite the pullback, IJM’s share price remains up nearly 21% year-to-date, while Sunway’s shares have more than doubled since early 2024, reflecting sustained investor interest in large diversified groups with exposure to infrastructure, construction, and commercial property in KL and Selangor.
Under the proposed deal, Sunway is offering RM3.15 per IJM share through a mix of cash and shares. The structure comprises RM0.315 in cash and 0.501 new Sunway shares per IJM share, implying a total valuation of around RM11 billion for IJM.
For every 1,000 IJM shares, shareholders would receive RM315 in cash and 501 Sunway shares, valued at RM2,835 based on Sunway’s issue price of RM5.65.
However, the valuation mechanics have become more complex following Sunway’s plan to list its healthcare arm, Sunway Healthcare Holdings Bhd, on Bursa Malaysia.
Sunway intends to distribute approximately 676 million Sunway Healthcare shares to its existing shareholders via a dividend-in-specie, on the basis of one healthcare share for every 10 Sunway shares held. The entitlement date has yet to be announced.
Following the listing, Sunway’s effective stake in its healthcare unit will be diluted from 84% to about 70%.
According to Hong Leong Investment Bank Research, the healthcare distribution is estimated to be worth around 18 sen per Sunway share. Once Sunway trades ex-dividend, its share price is expected to adjust downward to reflect this value transfer.
Crucially, the new Sunway shares issued to IJM shareholders as part of the takeover will not be entitled to this healthcare distribution due to timing differences, as clarified by Sunway’s management.
This has raised concerns among some investors that the healthcare spin-off effectively reduces the true value of the IJM offer. Nevertheless, analysts quoted by The Edge expect no change to the RM5.65 issue price or the number of consideration shares.
Market opinions remain divided.
Kenanga Research has advised IJM shareholders to reject the offer, arguing that it undervalues IJM and places too high a valuation on Sunway. At the proposed issue price, Sunway is valued at a forward 2026 price-earnings multiple of 27.6 times, compared with 19.4 times implied for IJM.
Based on Kenanga’s target price of RM4.73 for Sunway, the firm estimates the effective value of the offer for IJM at RM2.69 — below its RM3.40 target price for IJM and below the stock’s pre-announcement trading level.
In contrast, other research houses have recommended acceptance, noting that the deal allows shareholders to monetise IJM at a reasonable valuation while gaining exposure to the long-term growth of the enlarged Sunway group.
TA Securities highlighted that the offer values IJM above historical averages and enables shareholders to exit without waiting for a sector-wide re-rating.
Some market observers note that the structure appears more favourable to Sunway, particularly at the current share price. Ultimately, however, the decision rests with shareholders’ risk appetite and their confidence in Sunway’s long-term strategy.
From a broader perspective, fund managers point out that the deal gives IJM shareholders exposure to a KLCI-listed heavyweight — a factor that often commands a valuation premium and enhances liquidity.
The takeover is conditional on Sunway securing at least a 50% stake in IJM. Should its shareholding reach 75%, Sunway does not intend to maintain IJM’s listing status and will pursue compulsory acquisition once ownership crosses 90%.
The Employees Provident Fund (EPF), IJM’s largest shareholder with an 18.4% stake, also holds 8.75% in Sunway. While both groups operate across overlapping sectors such as construction, infrastructure, and property development, the acquisition would strengthen Sunway’s exposure to toll concessions and large-scale developments — assets that often anchor commercial property in KL, industrial land in Selangor, and integrated townships across growth corridors like Subang and Puchong.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 15 Jan 26
Malaysia