The construction giant is seeking to buy out all of the 3.5 billion shares of its rival IJM at RM3.15 per share.
In its exchange filing today, Sunway said it had served notice of its conditional voluntary take-over offer on the IJM Board to acquire all of the 3.5 billion IJM shares at RM3.15 per share.
It said the offer price will be satisfied via cash (10%) and the remaining 90% in the form of new Sunway shares at an issue price of RM5.65 each.
Sunway is controlled by its founder and chairman Jeffrey Cheah, 80, who holds a 0.5% direct interest and a 60% indirect stake in the group.
IJM is essentially owned by various institutional funds with its biggest shareholder being EPF with a 16.8% stake, followed by Retirement Fund (Incorporated) with 9.74%.
Assuming full acceptance of the offer, the total consideration will comprise approximately RM1.1 billion in cash and the issuance of 1.76 billion Sunway shares worth about RM9.94 billion.
The offer price represents a premium of 14.55% on IJM’s closing share price of RM2.75 per share on Friday, which values the group at RM10 billion.
The price is also a 26.91% premium to its three-month volume-weighted average market price of RM2.48 per share.
Trading of IJM and Sunway’s shares was suspended today for the announcement. Sunway’s share price closed at RM5.60 on Friday, giving it a market capitalisation of RM38.1 billion.
The offer is conditional on Sunway receiving acceptances of more than 50% of IJM’s voting shares by the closing date.
In the event IJM fails to meet Bursa Malaysia Securities’ public shareholding spread requirement of 25% following the offer, Sunway said it does not intend to address any shortfall and may seek to delist IJM.
Sunway said it intends to continue IJM’s existing businesses, with the company maintained as a separate subsidiary within the Sunway Group.
It said the proposed offer is envisaged to “bring together the strengths and capabilities of Sunway and IJM”.
“Given the prevailing macro-economic conditions, it is timely for industry players to collaborate through resources and capabilities sharing with the aim to strengthen performance and sustainability of operations,” Sunway said.
It added the deal would create a larger property and construction group in Malaysia, positioning Sunway as a “national champion” with regional scale.
The acquisition is expected to synergise IJM’s heavy infrastructure portfolio spanning ports, highways, and plantations with Sunway’s diverse portfolio which also includes healthcare, education, and retail.
Large-scale mergers among Malaysian property and construction groups are relatively rare. In 2010, UEM Land Holdings, backed by sovereign fund Khazanah Nasional, launched a nearly RM1.4 billion takeover of property group Sunrise, a deal completed in 2011 that created UEM Sunrise. - FMT
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