Adam Fleck, analyst for Morningstar, is studying the activity surrounding Kubota and CNH’s bids to acquire ag implement maker, Kverneland. Here’s was his take on it as of Tuesday.

“On Monday, CNH Global CNH announced a tender offer for farm implement manufacturer Kverneland for NOK 9.50 per share (about $245 million), topping rival Kubota's KUB recent NOK 8.50 per share bid (which was actually a formal agreement between Kubota and Kverneland).

“We doubt CNH will be successful in its initial advance, though, as Kverneland's shares shot up to nearly NOK 10.00 on the potential bidding war. CNH already has some exposure to Kverneland's products, as the latter has produced New Holland-branded mowers and rakes for CNH in North America since October, but the initial offer price is quite lofty, in our opinion, valuing the enterprise (including net debt) at about 12.3 times trailing-12-month EBITDA.

“In addition, Kverneland's operating margin of about 4% through the first 9 months of 2011 sharply trails CNH's 11% in its agricultural segment. Still, given the deal's relatively small size (Kverneland's sales totaled just 3% of CNH's revenue in 2010), and our uncertainty regarding timing and final price, we plan to maintain our $39 fair value estimate for CNH.

“A potential takeover of Kverneland also holds negative implications for AGCO AGCO , as the company has contracted Kverneland to sell and support hay balers in Europe since late 2010, and a new owner may discontinue this practice. Nonetheless, the size of this impact is again minimal, likely constituting less than 5% of AGCO's overall revenue in 2010. As such, we're also maintaining our $49 fair value estimate for AGCO.

Adam Fleck, CFA, is an associate director of research covering primarily heavy equipment and marine shipping firms. Fleck joined Morningstar in July 2006 after graduating cum laude from the Univ. of Notre Dame with a B.B.A. in finance, and a minor in piano. Prior to being named associate director in 2010, Fleck spent 4 years as an equity analyst at Morningstar, including two years as a senior analyst. Fleck became a CFA charterholder in 2010.