The proposed takeover of IJM Corporation Bhd by Sunway Bhd has been described as “not fair” and “not reasonable” by the independent adviser appointed to evaluate the deal. M&A Securities, which conducted the assessment, noted that the offer undervalues IJM shares by up to 51% compared to their estimated market value.
According to ShareInvestor, IJM has a mean target price of RM3.22, based on coverage by 12 research houses. The bid, launched in January, is a cash-and-share proposal that values IJM at RM3.15 per share. If successful, the combined group would emerge as a direct competitor to Gamuda Bhd, currently Malaysia’s largest construction company by revenue.
Despite the potential scale of the combined entity, the adviser emphasised that IJM shareholders could realise value independently by selling shares on the open market, without exchanging their holdings for Sunway shares.
Accepting the takeover would convert them into minority shareholders in Sunway, exposing them to additional risks such as share price volatility, integration and execution challenges, and reduced influence over business decisions.
The mean target price for IJM is RM3.22. Source: ShareInvestor
What is the right valuation of the IJM takeover bid?
Since the bid was announced, there has been significant debate over whether it is fair for IJM shareholders to accept the offer. According to the adviser, the fair value of IJM shares is in the range of RM5.84 to RM6.48 per share, reflecting the company’s strong underlying value.
The proposed RM3.15 per share offer represents a 46.1% to 51.4% discount to IJM’s estimated value, based on a sum-of-parts valuation that assesses each business segment separately. If the deal proceeds, IJM shareholders would move from full ownership of the company to holding roughly 20.6% as minority shareholders in Sunway.
Further supporting this view, RothschildCo Malaysia Sdn Bhd, appointed by the IJM Board for an internal valuation, assessed IJM’s indicative equity value at RM16.81 billion to RM19.72 billion, or RM4.80 to RM5.63 per share, highlighting that the Sunway offer substantially undervalues IJM and fails to reflect the company’s strategic position, growth prospects, or market potential.
Taken together, these valuations demonstrate that the Sunway bid provides shareholders far less than the intrinsic value of their holdings, reinforcing the recommendation that accepting the offer would be financially disadvantageous. Investors would effectively be exchanging a well-performing, independent company with strong growth prospects for a minority stake in a larger conglomerate at a fraction of its true value.
The independent adviser also argued that there is no additional incentive for shareholders to accept the offer. IJM remains an independent listed group with full strategic, operational, and financial autonomy, allowing it to continue executing its growth strategy and creating shareholder value.
Moreover, IJM is currently in an active value-creation phase, with a strong order book, diversified business ventures, ongoing geographical expansion, and strategic initiatives that are yet to be fully realised.
The Group currently has an RM16.6 billion construction order book, with industrial buildings making up 39% of projects in Malaysia and Singapore. For FY2026, IJM has already secured around RM8 billion in new contracts, hitting the higher end of its target, and still has a RM17 billion tender book in the pipeline.
IJM has an RM16.6 billion construction order book, which translates to an estimated RM8 billion in revenue for the full year 2028. Source: ShareInvestor
Board Recommends Shareholders Reject Takeover Offer
By remaining independent, shareholders can continue to participate in future growth and value creation, without the uncertainties of the proposed takeover.
The IJM Board has fully endorsed the adviser’s recommendation, stating that it “concurred with the conclusion that the offer is not fair and not reasonable.” The board unanimously recommends that shareholders reject the proposal, affirming that it does not reflect the company’s true value or provide sufficient benefits to existing shareholders.
While the Sunway takeover would create a larger construction and property group capable of competing with Malaysia’s top firms, analysts have pointed out that the offer significantly undervalues IJM, exposes shareholders to new risks, reduces their influence, and offers no additional financial incentive.
However, following its decision to reject Sunway Bhd’s takeover offer, IJM plans to pursue a monetisation strategy that could include listing its construction business and mature highways. Although the Sunway takeover may not happen immediately, investors could still see the possibility of Sunway acquiring IJM’s construction business in the future.