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$370 million bid for Kidman blocked

kidman2Scott Morrison, federal treasurer, has told Australia’s largest landholder, S Kidman and Co, it cannot proceed with its $370 million deal to sell its cattle stations to a consortium controlled by a Chinese company – at least for the moment.

The treasurer’s decision will stop the sale becoming an election issue, and will also allow possible Australian bidders to group together and come up with an alternative offer.

“I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid,” Morrison told a news conference in Canberra.

Under the proposed bid, which is also being studied by the Foreign Investment Review Board, more than 100,000 square kilometres of pasture would have passed into Chinese control. Kidman is one of the country’s biggest beef producers, owning 18 cattle stations in three states and the Northern Territory. With a herd of 185,000 cattle it produce grass-fed beef for export to Japan, the United States, and South East Asia

Dakang Australia, which holds 80% of the group making the bid, is 51% owned by Hunan Dakang (itself controlled by Shanghai Pengxin and 49% owned by Shanghai Cred Real Estate Stock Co, controlled by Gui Goujie. Shanghai Pengxin is a multibillion dollar private conglomerate with over 40 subsidiaries.

The minority Australian stake of 20% was to have been Australian Rural Capital, a small ASX-listed company that had yet to raise the money to finance its part of the operation.

The move to block the Chinese takeover is bound to lead to an adverse reaction from Beijing, although, of course, China would not permit a similar move on one of its enterprises.