The company announced yesterday the offer price was increased to RM2.70 per share and RM1.20 per warrant, from RM2.40 and 90 sen under the earlier offer.

The revised offer was a 14.2% increase for Kurnia Setia’s entire business and undertaking, including its assets and liabilities. It would cost Kurnia Setia’s major shareholders about RM308.47 million to acquire the company based on its June 5 shareholdings, compared to RM270 million previously.

Earlier this month, the major shareholders comprising TAS Kurnia Sdn Bhd, TAS Industries Sdn Bhd, individuals related to shareholders of TAS Kurnia and Lembaga Kemajuan Perusahaan Pertanian Negara Pahang (LKKP) had offered to acquire its entire business.

Following the proposed sale, Kurnia Setia would carry out a capital repayment to its shareholders by cancellation of its existing shares. The company’s shareholders would then receive cash of RM2.40 per share and 90 sen per warrant. The offer was due to lapse today.  

Both Kurnia Setia’s share price and warrant price closed at six-month highs on Tuesday. Trading was suspended yesterday for the announcement.

The new offer price for the shares is at a 12% premium to Kurnia Setia’s last traded price of RM2.41 and new offer price for the warrants is 20.6% above the closing price of 99.5 sen.

The takeover offer was made through Kreatif Selaras Sdn Bhd, a special-purpose private limited company incorporated for the purpose of the acquisition. TAS Group and LKKP hold 30.5% and 22.8% of Kurnia Setia respectively, according to the original announcements.

“The company shall within seven days of accepting this offer enter into a definitive agreement with Kreatif Selaras incorporating all terms set out in the offer and detailed procedures for completion of the proposed disposal,” stated Kurnia Setia.

The purchase consideration is based on Kurnia’s outstanding 101.49 million shares, 1.83 million outstanding ESOS (employee share option scheme) options and 24.59 million outstanding warrants as at June 5. This is also assuming that none of the warrant holders exercise their warrants between now and the acquisition completion date.

The 10-year warrants are due to expire on April 20, 2018 and the strike price is RM1.50.

Kurnia Setia is primarily in the business of cultivating palm oil and selling fresh fruit bunches. It owns 14,000ha of oil palm estate in Pahang, of which 12,000ha is planted.

This article appeared in The Edge Financial Daily, June 18, 2009.