Malaysian Conglomerates Sunway and IJM to Merge in RM11 Billion Deal Forming Largest Construction Group

Malaysian conglomerate Sunway has launched a RM11 billion conditional voluntary takeover offer for construction and property firm IJM Corp, aiming to create the country's largest construction-anchored conglomerate. The deal involves acquiring IJM at RM3.15 per share, a 14.6% premium over its last traded price. Sunway will pay 10% in cash and 90% through newly issued shares.

The takeover would combine IJM's infrastructure expertise with Sunway's diversified portfolio, including healthcare, education, and retail. The combined entity will control 2,300 hectares of land, RM118.1 billion in gross development value, and a RM13 billion construction order book. This consolidation is expected to enhance market scale and project execution capability for large infrastructure and data center developments.

Sunway and IJM suspended trading on January 12 as they await regulatory and shareholder approvals. If accepted, the deal is projected to complete by Q3 2026. IJM shareholders holding 50% of voting shares must approve the offer for it to proceed.

Why Did This Happen?

Sunway, led by founder Jeffrey Cheah, has long been positioned as a major player in Malaysia's property and construction sectors. The merger with IJM aligns with Sunway's strategic vision to expand its regional footprint and diversify its asset base.

The deal also reflects broader industry trends. Large-scale mergers in Malaysia's construction sector are rare but not unprecedented. UEM Land Holdings' 2010 acquisition of Sunrise to form UEM Sunrise is a notable historical example.

How Did Markets React?

IJM shares rose by up to 8% on January 13 following the announcement, closing up 4.7% at RM2.88. Meanwhile, Sunway shares fell 0.9%, trading at RM5.46. The volatility indicates mixed investor sentiment, with some capitalizing on the takeover speculation and others hedging risks.

Hong Leong Investment Bank and TA Securities have recommended that IJM shareholders accept the offer, citing its fair valuation and potential for future upside. However, Kenanga Investment Bank has advised rejecting the deal, arguing the price is below its estimated fair value.

What Are Analysts Watching Next?

Analysts are monitoring how the merger impacts market competition and regulatory scrutiny. According to Ng Jo Yee of UOB Kay Hian, the deal could strengthen Sunway's credit profile and access to financing, enabling the combined entity to secure larger infrastructure contracts and improve operating efficiency.

UBS and Maybank Investment Bank are advising on the transaction, with UBS acting as the international financial adviser and Maybank as the principal adviser to Sunway. The success of the merger will also hinge on maintaining public shareholding requirements for IJM after the takeover.

Sunway is also preparing for its healthcare arm's IPO in early 2026, which is expected to raise over RM3 billion. This development adds another strategic dimension to the conglomerate's expansion plans.

The merged entity will face intense scrutiny from investors and regulators alike. Both companies have consistently denied merger speculation in the past, making this announcement particularly significant.

The deal's success will depend on its ability to deliver tangible synergies, manage integration risks, and maintain operational continuity. IJM's heavy infrastructure projects in Johor, combined with Sunway's township development model, offer a complementary fit that could drive long-term value.

Investors will also watch for any follow-up actions related to Sunway's recent MCL Land acquisition and healthcare IPO plans. These moves highlight the conglomerate's broader strategy to expand its regional influence and diversify revenue streams.

If completed, the Sunway-IJM merger would mark a pivotal shift in Malaysia's construction and property landscape. It could set a precedent for future consolidation among major players and reshape market dynamics for years to come.