Sunway Stands Firm on IJM Takeover Bid

KUALA LUMPUR (March 26): Sunway Bhd is holding its ground on its RM3.15 per share takeover offer for IJM Corp Bhd, emphasizing that the bid is fair, well-supported by analyst valuations, and reflects Sunway’s strong financial performance.

Founder Tan Sri Dr Jeffrey Cheah stated clearly that the offer will not be increased, warning that Sunway will withdraw if it fails to secure at least 50% plus one share. He described the proposal as the “best possible offer” and expressed confidence in unlocking value from IJM’s assets through integration rather than asset stripping.

Sunway believes the merger could significantly boost its scale, projecting a combined market capitalization of up to RM50 billion. This would position the group among the largest listed companies in Malaysia, driven by its strong brand, management, and operational capabilities.

Despite resistance from major shareholder Permodalan Nasional Bhd (PNB), which holds 13.3% of IJM and has rejected the offer, Cheah suggested the move may be strategic bargaining to push for a higher price.

Meanwhile, non-executive co-chairman Idris Jala reported that Sunway has secured about 13% acceptance so far and expects more shareholders to tender their shares closer to the April 6 deadline.

He also defended the valuation, noting that the RM3.15 offer aligns closely with independent analyst target prices, and highlighted Sunway’s superior 10-year shareholder return compared to IJM. Additionally, he dismissed concerns about funding, stating Sunway is using its own cash reserves rather than IJM’s.

What I Learned

From this case, several important insights stand out:

1. Firm Negotiation Strategy Matters
   Sunway’s refusal to raise its offer shows how companies sometimes set a “final price” to signal confidence and avoid overpaying. This can pressure shareholders to decide within a clear boundary.
2. Valuation Justification Is Key
   The company backed its offer with independent analyst targets, showing that credibility in M&A deals often depends on aligning with market consensus.
3. Shareholder Dynamics Can Influence Outcomes
   PNB’s rejection highlights how major shareholders can shape or delay deals. Their actions may also be strategic, not purely based on valuation.
4. Timing Behavior in Markets
   The expectation of a last-minute surge in acceptances reflects a common market pattern—investors often wait until deadlines before making decisions.
5. Track Record Drives Confidence
   Sunway emphasized its stronger historical returns to justify why it can improve IJM’s performance, showing how past performance influences investor trust.
6. Mergers Aim for Synergies, Not Just Size
   The goal is not just to grow bigger but to create additional value (e.g., improving margins and generating extra profits through operational efficiencies).
7. Financial Strength Supports Strategic Moves
   Having strong cash reserves allows companies like Sunway to pursue acquisitions without relying heavily on external or target company funds.