IJM Land, MRCB merger called off, shares slide

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd's proposed merger has been called off after both parties failed to agree on the terms of the Memorandum of Understanding (MoU), which expired on Wednesday, Dec 29.

Shares of both companies and IJM Corp Bhd fell on Thursday, Dec 30 ahead of the announcement which was made at midday. Trading in the shares of MRCB, IJM Corp and IJM Land has been suspended from 12pm and will resume trading on Monday, Jan 3 at 9am.

At 12pm, IJM Land was down 38 sen to RM2.86 with 21.53 million shares done while IJM Land-WA fell 28 sen to Rm1.61 with 44.39 million units transacted.

IJM and its warrants, IJM-WC fell 27 sen each to RM6.23 and RM2.76. MRCB shed six sen to RM1.99 with 4.86 million shares done.

MRCB said that after a series of discussions, MRCB and IJM Land have not been able to reach an agreement on the definitive terms and conditions of the proposed merger.

"As such, the memorandum of understanding in relation to the proposed merger has lapsed and ceased to have any further effect," it said.

To recap, The Edge FinancialDaily reported the merger between MRCB and IJM Land was expected to create the country's second-largest property company with a market capitalisation of over RM7 billion and landbank of more than 9,000 acres.

The newly merged entity (newco) is expected to be listed after the second quarter of next year.

In the proposed merger, shareholders of both companies will exchange their shares for shares in the newco. Shareholders of MRCB and IJM Land will be offered a non-binding offer price for their shares at RM2.30 and RM3.65, respectively, which are at premiums of 15.6% and 18.1%, respectively, over their last traded prices last Friday.

The offer valued IJM Land at a price-to-book ratio of 2.43 times and MRCB at 2.61 times, based on their latest reported results as at Sept 30.

The newco is also expected to have combined revenues of over RM2 billion and an asset base in excess of RM3 billion.

The Employees Provident Fund (EPF) is a common shareholder in all the companies involved in the merger. The EPF owns a 19.4% equity stake in IJM Corp, while it is the single largest shareholder of MRCB with a 41.63% stake. IJM Land is in turn a 62.48%-owned unit of IJM Corp.

The property development activities of MRCB are mainly concentrated in KL Sentral, although it has a 4,000-acre township in Perak.

IJM Land's strength is in township developments with projects focused in the Klang Valley, Penang, Johor, Negri Sembilan, Sabah and Sarawak. It also has projects in Vietnam and China, and a total landbank of over 5,000 acres.

The merged company is also widely expected to gain from the development of the 3,300 acres of Rubber Research Institute (RRI) land in Sungai Buloh, which was awarded to the EPF.
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