PETALING JAYA: IJM Corp Bhd says it will acquire stakes in
Road Builder Holdings Bhd and RB Land Holdings Bhd, an event widely
speculated in the media, including StarBiz, earlier.
In a one-paragraph statement yesterday, IJM said it requested for a
trading suspension of its securities today pending announcement of a
proposed material transaction of an acquisition of interests in Road
Builder and RB Land.
Datuk Krishnan Tan
RB Land is included in this corporate exercise as it is a
public-listed subsidiary and property division of Road Builder, which
owns almost 70% of the company.
In separate announcements, Road Builder and RB Land said their shares
would be suspended from trading today pending IJM’s announcement. IJM
will hold a press conference at 4pm when managing director Datuk
Krishnan Tan will announce the acquisition proposal.
It is believed the company may make a general offer for all the
shares of Road Builder and RB Land through a share swap. “I think
they’ll go for a full merger with the Road Builder group,” a dealer
It would be a large acquisition for IJM which had a total market
value of RM3.2bil. Its share price rose 10 sen to an eight-year high of
RM6.45 yesterday while IJM-warrant climbed 6 sen to a record high of
The target companies of Road Builder had a market value of RM1.47bil
and RB Land’s market value was RM290mil.
Road Builder’s share price was 9 sen higher at RM2.89 yesterday while
RB Land was 0.5 sen lower at 51 sen.
It was earlier reported that IJM might value Road Builder at RM3.00 a
share as that was the highest price at which former executive vice
chairman Tan Sri Chua Hock Chin sold his shares.
Road Builder announced on Oct 4 that Chua sold his 13% stake in the
company and resigned from his post on the same day.
If IJM were successful in its acquisition proposal, its business base
would be greatly expanded. IJM itself has businesses ranging from
construction to property development, manufacture of building materials
and plantations in Malaysia. In addition, it has large operating assets
in construction, toll road concessions and property development
overseas, especially in India.
A merger with Road Builder would combine this group’s range of
businesses in construction, property development, toll roads and ports
into an enlarged IJM group.
IJM is on a roll. It also has a proposal pending for the purchase of
a 25% stake in Kumpulan Europlus Bhd, a construction and property
development group, which has a major stake in Talam Corp Bhd, a large
property developer that had faced financial difficulties.
It was announced on Monday that IJM received two letters of award
from Talam to complete the remaining construction works for six of its
property development projects at a cost of RM717mil, a move viewed by
observers as tapping business synergies with Talam as well as lending a
helping hand to the latter.
Krishnan described IJM’s role there as “a beneficiary” as a
contractor at the moment, and would not be drawn into commenting on its
potential role as an owner. “We will take it one step at a time,” he
told StarBiz yesterday, adding that the construction works would
be profitable for IJM.
Some analysts reported that IJM might face collection risks in the
The construction award, Krishnan said, was part and parcel of Talam’s
debt-restructuring scheme in which “we get paid first” from the bank
loans drawn down by house buyers.
In a conventional system, the money paid by house buyers would be
held in a housing development account operated by the developer.
Following Talam’s debt-restructuring scheme, the sale proceeds would
be ring-fenced in a special-purpose vehicle and used to pay the main
contractor and loan stockholders. “We will get first bite (of the sale
proceeds),” Krishnan said.
Prior to Talam’s debt-restructuring scheme, IJM could not step in to
help Talam to complete construction works because “we would have just
become one of the unsecured creditors,” he added.
Sale proceeds from the six projects would be forthcoming as most of
the houses in those areas had been sold, he added.
Construction at virtually all of Talam’s projects will resume, now
that IJM has become the principal contractor, and conversion of
marketing sales into revenue will help to strengthen Talam’s balance
At the same time, with the resumption of construction, Talam is more
likely to be able to obtain development orders for new projects that may
be jointly undertaken with IJM.