MACC probe throws uncertainty over Sunway's RM11bil takeover of IJM

 

A Malaysian Anti-Corruption Commission (MACC) investigation involving IJM Corp Bhd has emerged as a potential execution risk to Sunway Bhd’s recently announced takeover bid, though analysts say the probe does not undermine the validity of the RM3.15-per-share offer or its underlying investment appeal.

KUALA LUMPUR: A Malaysian Anti-Corruption Commission (MACC) investigation involving IJM Corp Bhd has emerged as a potential execution risk to Sunway Bhd's recently announced takeover bid, though analysts say the probe does not undermine the validity of the RM3.15-per-share offer or its underlying investment appeal.

Hong Leong Investment Bank (HLIB) said the ongoing probe could lead to heightened due diligence requirements, potentially delaying the completion of Sunway's conditional voluntary general offer (VGO), which was announced just a week earlier at slightly over RM11 billion and had been targeted for completion by the third quarter of calendar year 2026 (3QCY26).

However, HLIB noted that under Securities Commission (SC) rules, an offeror is not allowed to cancel or withdraw a takeover offer without prior written approval from the SC. As such, while timelines may be affected, the offer itself remains intact.

"A worst-case scenario to our knowledge would entail either withdrawal in writing to SC or failure in obtaining shareholders' approval (EGM), resulting in Sunway being prohibited from making another takeover offer for the next 12 months," HLIB said in a note.

Despite these risks, HLIB made no changes to its earnings forecasts and reiterated its "Accept" recommendation for IJM shareholders.

Shares of IJM came under heavy selling yesterday, with the stock sliding sharply after the midday break and prompting Bursa Malaysia to suspend intra-day short-selling.

The counter fell by more than 16 per cent to an intraday low of RM2.34, down 46 sen, prompting the exchange to impose the restriction, which will be lifted at 8.30am today. tomorrow.

Earlier, IJM announced that officers from the MACC and the Inland Revenue Board (IRB) had visited its office to obtain information. In a filing with Bursa Malaysia on Monday, IJM said that it is cooperating fully with the authorities and that its business operations continue as usual, although the nature of the investigation was not disclosed.

Separately, it was reported that MACC has identified a member of IJM's senior management and a company advisor as persons of interest in a probe into an alleged money laundering scheme. HLIB noted that similar allegations had surfaced in March 2025, which IJM subsequently refuted during an analyst briefing.

HLIB continues to view Sunway's bid positively, noting that the offer price implies fair FY26–FY28 price-to-earnings multiples of 20.7x, 17.5x and 17.2x, as well as an audited price-to-book ratio of 1.1x, compared with IJM's five-year average trading multiples of 17.3x P/E and 0.67x P/B.

It highlighted that the deal structure includes a 10 per cent upfront cash component while preserving upside through Sunway shares, with IJM shareholders expected to hold about 20.6 per cent of the enlarged merged entity.

HLIB also pointed to potential synergies and value creation from Sunway's integrated township development model, optimisation of IJM's land bank and the monetisation of non-core assets.

"We advise shareholders to accept the offer given that it is within a reasonable margin of our previous target price of RM3.40. Shareholders can also roll over their investments into the MergeCo, riding on further upside as synergies gradually materialise." - NST