Malaysian billionaire Jeffrey Cheah urges IJM’s shareholders to assess Sunway’s $2.7B takeover bid objectively

In a recent last-minute pitch to IJM shareholders, Cheah explained that early discussions with and feedback from these institutional investors had been promising, with many agreeing that the offer made commercial sense.

“I thought I had gotten the support of the GLICs. Each of them said the offer made commercial sense when we met them, so I was confident,” Cheah said in an interview with select media, as quoted by New Straits Times.

However, sentiment shifted soon after amid developments outside the deal itself, including racially charged criticism on social media and reports that the Malaysian Anti-Corruption Commission was investigating IJM over alleged governance issues.

“I believe the ‘noise’ may create some short-term hesitation, but closer to the deadline, people will sit down, study properly, and make their decisions,” Cheah said. “I don’t think they are being entirely objective. It is not easy for them, I understand that.”

GLICs collectively hold about 49% of IJM. So far, the Employees Provident Fund, the largest shareholder with a 20.5% stake, has rejected the offer, followed by Permodalan Nasional Berhad with 13.3%, according to The Star.

The other GLICs have not publicly announced their decisions, though local media reports suggest they may take a similar stance.

Announced in January, Sunway’s takeover proposal offers RM3.15 per IJM share under a cash-and-share deal. Some 10% of the offer price will be paid in cash while the remaining 90% will be paid in newly issued Sunway shares priced at RM5.65 apiece, Reuters reported.

Under this offer, an investor holding 1,000 IJM shares would receive RM315 in cash and 501 Sunway shares, worth RM2,595 based on Wednesday’s closing price of RM5.18. By comparison, the same block of IJM shares was worth RM2,230 at a closing price of RM2.23 that same day.

The deal had earned 99.27% approval from Sunway shareholders last month. To proceed, the deal must be accepted by over 50% of IJM shareholders, who have until next Monday to decide.

Sunway executives said the offer has so far secured roughly 20% acceptances from IJM shareholders, with the figure expected to soon rise to about 25%.

While 100% acceptance appears unlikely, Cheah said he is aiming to obtain at least 50% plus one share, which would give Sunway effective control of IJM.

Hence, he hopes that shareholders, including both retail and institutional shareholders, would be convinced to take up the offer.

“To get 50% plus one share is difficult, but hopefully a miracle will happen, or suddenly the GLICs decide to accept (the offer); maybe not all, but half,” Cheah said.

Cheah also highlighted that the structure of the deal allows IJM shareholders to retain a stake in the enlarged Sunway group and benefit from its future growth prospects.

“I told them (the GLICs) that our proposal (to take over IJM) is for them to stay on because the objective is not to push the institutional shareholders away,” he said, as quoted by The Edge Malaysia.

Asked whether Sunway might revise the offer or raise the cash component, Cheah said such a move would be difficult.

“If you change, there’s no end, and also my credibility, as I already said it very clearly. This is the best offer. If they (IJM shareholders) don’t accept, I (will) walk away. That’s what it is now,” he said.