RM11B Sunway-IJM Takeover Stalls Over Political, Corruption Concerns
Malaysia's RM11.1B Sunway-IJM merger faces political backlash over Bumiputera control and corruption concerns, with PM Anwar holding veto power through state fund stakes.
Malaysian Prime Minister Anwar Ibrahim holds decisive control over Sunway Bhd's RM11.1 billion (~US$2.8 billion) takeover bid for IJM Corporation, as state-linked investment funds now own nearly 50% of the target company. The deal, announced January 12, would create a top-10 entity on Bursa Malaysia with RM48 billion market capitalization, but has become entangled in racial politics and controversial corruption allegations.
State Funds Give Government Veto Power
The Employees Provident Fund (EPF) increased its IJM stake to 20.5% since Sunway's offer was announced, giving government-controlled entities collective ownership approaching 50%. This concentration of state ownership provides Anwar with effective veto power over the transaction, which requires at least 50% plus one shareholder acceptance to proceed.
Sunway's offer values IJM at RM3.15 per share, representing a 14.5% premium over the RM2.75 closing price before announcement. The deal is structured as 90% share swap and 10% cash (RM1 billion), with IJM shareholders receiving approximately 20.6% of the combined entity.
However, independent advisers M&A Equity Holdings and Kenanga value IJM at RM3.40 per share and recommend rejection, citing concerns about Sunway's RM13 billion debt burden and the heavy share-swap structure. The offer closes April 6 at 5pm.
Political Opposition Frames Deal as Ethnic Threat
UMNO Youth chief Akmal Saleh called for blocking the deal on January 18, framing it as threatening Bumiputera (Malay majority) economic interests. Critics claim the merger would place a successful Bumiputera company under control of Sunway, founded by non-Bumiputera tycoon Jeffrey Cheah.

The political pressure carries weight as Malaysia faces general elections expected by late 2026. Rather than blocking Sunway outright, political sources suggest pushing for rival bids from Bumiputera-controlled firms including Khazanah Nasional's UEM Group, YTL Corp (which has ties to Malaysia's current King), and Malaysian Resources Corporation.
IJM controls strategic assets including Kuantan Port, positioned to benefit from the East Coast Rail Link's 2027 completion, plus highways and construction projects across Malaysia. The company generated profits before tax exceeding RM4 billion over five years while maintaining over RM2 billion in cash reserves.
Corruption Investigation Raises Questions About Timing
The Malaysian Anti-Corruption Commission (MACC) and Inland Revenue Board raided IJM's offices on January 19, one day after Akmal's call to block the deal. Authorities are investigating alleged RM2.5 billion fraud and money laundering involving Britain, freezing 55 personal and company accounts.
IJM chairman Krishnan Tan was arrested at his home February 5 and released the same day. The company denies money laundering allegations and states it has not been approached by Britain's Serious Fraud Office. IJM claims fewer than 10 frozen accounts belong to the firm, with only RM15.8 million frozen having minimal operational impact.
Sources questioned the investigation's legitimacy, describing it as a "fishing exercise" with officers unfamiliar with corporate governance. The suspicious timing has raised concerns about potential political interference in what should be a commercial transaction.
Broader M&A Landscape Shows Government Influence
The Sunway-IJM battle reflects broader trends in Malaysia's M&A market, where government-linked entities play increasingly active roles. Malaysia's M&A transaction volume reached US$8.3 billion in 2024, with state funds participating in major deals including the take-private of Malaysia Airports Holdings Berhad by a consortium including Khazanah Nasional and EPF.
The Malaysian government plans to introduce merger control regulations to the Competition Act by end-2025, empowering the Malaysian Competition Commission to review and reject deals creating monopolies. Anwar has expressed private reservations over reduced competition in construction, potentially creating an oligopoly for government contracts if the Sunway-IJM merger proceeds.
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