In the case of Kurnia Setia, while its major shareholders had announced at the beginning of June their intent to take the plantation company private, it was the revision of the offer price by over 10% that pushed the stock to close at a 12-month high of RM2.64 on Friday.

The takeover offer for oil and fat-product related manufacturer Premium Nutrients, meanwhile, was triggered when its major shareholder increased its stake past the 33% threshold. It lifted the stock, which  had been trading at an average 16.6 sen over the past 12-months, to 24.5 sen at Friday’s close.

For Kurnia Setia, Standard & Poor’s believed the deal was fair at the new offer price of RM2.70 for the company’s shares and RM1.20 for its warrants. To recap, the company is being taken private by TAS Group and Lembaga Kemajuan Perusahaan Pertanian Negara Pahang via a special-purpose vehicle Kreatif Selaras Sdn Bhd.

Previously, the purchase price for Kurnia Setia shares and warrants were RM2.40 and 90 sen, respectively.

“We do not expect major hiccups in the privatisation move, as the offer price is attractive and represents a 12% and 20.6% premium to Tuesday’s pre-suspension price of the ordinary share (RM2.41) and warrant (99.5 sen).

“In addition, minority shareholders are also entitled to their single-tier final dividend of five sen,” said S&P in its June 18 report.

Also, looking at Kurnia Setia’s books, the company grew increasingly profitable over the past four years. Kurnia Setia’s net assets per share as at the end of March stood at RM2.72, which almost matches the new offer price. The company has cash of RM93.1 million, while its short-term and long-term debts come in at RM5.1 million and RM18.7 million, respectively.

“Given that crude palm oil prices are slowly recovering in tandem with global commodity prices, it’s a good time for Kreatif Selaras to take the company private,” said a plantations analyst.

However, even when CPO prices were moving upwards, the company’s share price struggled to perform, given its small size. Kurnia Setia owns 14,000 hectares of plantation land in Pahang, of which 12,000 hectares are planted.

The two research houses that covered the stock, S&P and SJ Securities, had hold and overweight recommendations on the counter before the offer was announced. Its share price averaged RM1.90 over the past 52 weeks.

Less is known about Premium Nutrients’ potential takeover however. According to the announcement on Wednesday, major shareholder Koperasi Kebangsaan Permodalan Tanah (KKPT) Bhd entered into a conditional share purchase agreement with a private individual to acquire a 2.08% stake.

As a result, KKPT now holds a 34.21% stake in Premium Nutrients, but little is known beyond that. The offer price for the remaining shares KKPT does not own in the company is 25 sen cash, which is the same price at which it bought the 2.08% stake.

However, KKPT has not announced whether it will take the company private or its future plans for the company.

Based on the company’s books, while the offer price of 25 sen is at a premium to the stock’s current price, it is still below its net assets per share of 53.2 sen as at the end of March.

And while Premium Nutrients is profitable, net profit growth is fairly flat. The company also has short-term and long-term borrowings amounting to RM180.8 million and RM40.3 million, respectively. Its cash stood at RM66.3 million as at the end of its first quarter.

“There is a chance that the minority shareholders would not go for the offer as the company just announced its intention to spend RM25 million to expand its operations over the next three years,” said an analyst.

So while Kurnia Setia seems like a done deal, the Premium Nutrients case is not clear cut.

This article appeared in The Edge Financial Daily, June 22, 2009.