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Tuesday, January 4, 2011

MRCB-IJM Land merger aborted ‘over CEO choice’

PETALING JAYA: The inability of Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd to come to an agreement over who will lead the new entity is the cause of the merger between the two property firms being called off.

A source confirmed this to StarBiz yesterday following both companies' announcements to Bursa Malaysia last Thursday that the merger was aborted as they were unable to reach an agreement on the definitive terms and conditions of the proposed merger, following a series of discussions.

“The breakdown in talks is purely management related essentialy on the leadership of the new entity,” the source said.

He said there was a difference in opinion on whether MRCB chief executive officer (CEO) Mohamed Razeek Hussain or IJM Land CEO-cum-managing director Datuk Soam Heng Choon should lead the new entity.

“No one could agree on this fundamental issue,” he said.

According to sources, the Employees Provident Fund (EPF) abstained from the discussion due to the fund's stakes in IJM Corp Bhd (16.91% single-largest shareholder), IJM Land (5.77%) and MRCB (41.95%).

IJM Corp held a 62.76% stake in IJM Land.

Shares of IJM Corp, IJM Land and MRCB fell yesterday at the opening after being requoted following their suspension at midday last Thursday.

At the close, IJM Land fell 9 sen to RM2.77, IJM Corp dropped five sen to RM6.18 while MRCB added one sen to RM2.

It was understood that the newco would have stood a better chance at getting major portions of the EPF-led development of the 3,300-acre freehold land owned by the Rubber Research Institute in Sungai Buloh, one of the major projects under the Economic Transformation Programme.

MRCB is currently assisting the fund to masterplan the project and, notwithstanding the deal falling through, should still get portions of the project.

HwangDBS Vickers Research Sdn Bhd analyst Chong Tjen San observed that while it was disappointing that the deal was called off, both companies did not have much to worry about.

“All is not lost although MRCB will have lost the opportunity to leverage on IJM Land's township development expertise. However, MRCB should still be able to win the right to develop a sizable portion of the Sungai Buloh project, particularly the transport hub,” he said.

Chong said a well-run company such as IJM Land also had nothing to worry about. “Although the company stands a better chance in gaining a foothold in the Sungai Buloh project if the merger went through, they've other projects including the Light Waterfront project in Jelutong,” he said.

In fact, analysts were confident that IJM Land should weather the failed merger quite well as besides the RM5.5bil Light Waterfront project spread over 210 acres, the company was also in a 50:50 joint venture with Kumpulan Europlus Bhd to develop the 2,500-acre Canal City project near Kota Kemuning worth an estimated RM6.3bil.

By The Star

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