Malaysian Property Firms to Merge

Malaysian property firms including IJM Land Bhd. and Malaysian Resources Corp (MRCB), plan to merge into a new company with a goal of becoming the second-largest property group in Malaysia with a market capitalization of over six billion ringgit.

The companies will merge through a share-swap arrangement and will be a part of an ongoing consolidation in Malaysia’s property sector. UEM Land Bhd. proposed buying the entire capital of Sunrise Bhd. in November in order to create the biggest property group in Malaysia with a market capitalization over  9 billion ringgit (87 billion baht).

IJM Land, 63%-owned by IJM Corp., has a market capitalization of 3.4 billion ringgit, while MRCB has a market capitalization of 2.86 billion ringgit.  If merged, IJM Land-MRCB would have a stronger balance sheet to take on jobs in the region and the combined company’s shares would have greater liquidity than the shares of the two former individual companies.

According to Sharizan Rosely, an analyst with CIMN Research in Kuala Lumpur, the deal will favor investors as it will create a more liquid property company and the right formula for success as IJM Land has good branding in the residential segment, while MRCB will bring in commercial expertise.