Talk of IJM taking unit private resurfaces

Talk of IJM taking unit private resurfaces
BTimes
Published: 2008/09/05

SPECULATION that IJM Corp Bhd may take its subsidiary, Industrial Concrete Products Bhd (ICP), private has re-emerged, Aseambankers says in a report.Construction group IJM currently holds 63.5 per cent of ICP, which makes building materials.The deal could improve IJM's net profit in fiscal 2010 by up to five per cent if it is done in cash and all minorities accept the offer, said the report, which was released yesterday."Based on current weak market conditions, the (assumed) 10 per cent premium could well entice ICP minorities to take up the offer," it added.

Aseambankers has assumed an offer price with a 10 per cent premium over ICP's last closing price of RM2.80. This would value ICP at RM3.08 a share, or RM1.13 billion in entirety.It would also cost IJM RM413 million for the rest of ICP shares it does not own. If IJM decides to offer shares, it will need to issue about 9.5 per cent of its paid-up capital."We have been monitoring ICP and are positive on its prospects, especially its spun pile operation in China, which offers huge infrastructure works potential," Aseambankers said.

ICP made a net profit of RM32 million in its first quarter to June 30 2008, a 69 per cent jump from the same period last year. This was 22 per cent of IJM's net profit, Aseambankers said.However, it will not change its recommendation for investors to hold IJM shares due to broader market concerns overriding small positive factors. ICP shares closed unchanged at RM2.80, while IJM shares rose two per cent to RM5.15 yesterday.