I had previously posted Part 1 - which is mostly on the UEM Land and Sunrise Berhad merger. If UEM Land + Sunrise turns out to become the largest developer by market capitalization as well as land bank - I see a jewel in the MRCB-IJM Land marriage.
Hot on the heels of the UEM Land - Sunrise merger, Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd announced that they too will merge - and it is expected to create the country's second-largest property player with a market capitalization of over RM 7 billion and a land bank of more than 9,000 acres. Both MRCB and IJM Land - is expected to relisted as a merged entity in the second half of next year.
In the proposed merger deal - the shareholders of both companies will exchange their shares for some new shares in the new listed entity. The shareholders of MRCB are offered RM2.30/share - which is a premium of 15.6% to the last traded price on Friday. IJM Land's shareholders meanwhile are offered RM 3.65/share - at a premium of 18.1%. These offers value MRCB at 2.61 times price-to-book ratio, and IJM Land at 2.43 times.
1Sentral - a prominent landmark in KL Sentral.
The merger - valuing IJM Land + MRCB at about RM 7 billion - or up to RM 8.8billion (assuming full conversion of the RCULS) - puts them at No.2 in terms of market capitalization. The same for the UEM Land + Sunrise entity - a larger entity attracts fund managers as well as institutional investors. Its free float would go to about 40%, with IJM Corp Bhd still holding about 40% and EPF still holding about 21%.
How about the merger synergy, some might ask?
I see the IJM Land and MRCB merger also as a win-win scenario. IJM Land, after taking over RB Land years back, has plenty of landbank sprawling all around the country, with various projects focused in the Klang Valley, Penang, Johor, Negeri Sembilan as well as Sabah and Sarawak. Its other projects - includes developments in China and Vietnam - all these gives them a total landbank of over 5,000 acres. MRCB on the other hand - has been relying a lot on the RM12billion GDV KL Sentral development. They do have a 4,000 acre township development in Perak as well. Both their landbanks add up together - sees an enlarged landbank with diversified locations and quality. I foresee the IJM Land - MRCB merger to become a major force in the months to come with all the high-quality landbank.
The RM12 billion KL Sentral.
On top of that, the merged IJM Land - MRCB company is also expected to benefit from another prime development - that is the 3,300 acre RRI Land in Sungei Buloh, which has been awarded to EPF - who is currently the MRCB majority shareholder. MRCB had been a niche developer - with its KL Sentral mixed and integrated development, and then IJM Land has been an experienced township developer - both add up, one has awesome land in Sungei Buloh, the other with experience and portfolio - combined together they are a formidable pair.
The Light, Penang - IJM Land's jewel.
So, I have commented on the No.1 UEM Land-Sunrise, and now on No.2 IJM Land-MRCB. Next up, would be the third merger - the Suncity-Sunway deal - and other potential merger deals as well perhaps? We shall see. Come back later to read more ok. =)