S Kidman & Co $370m sale awaits foreign investment approval from Treasurer
A Chinese-led consortium has pipped the Australian bidders for the nation’s largest landholder with an increased $371 million offer for S.Kidman & Co but the controversial deal is still subject to foreign investment approval from the Treasurer, who is not expected to make a decision until after the election.
Kidman announced on Tuesday it had entered into an agreement with Chinese-based Dakang Australia Holdings and ASX-listed Australian Rural Capital to sell the company for $370.7 million, higher than its original offer which was rejected last year on national interest grounds.
The company, which covers almost 11 million hectares of cattle stations – including the world’s largest, Anna Creek – was offered for sale this time last year through EY, but a foreign bid to buy the company was blocked by Treasurer Scott Morrison in November because of national interests.
The latest agreement, which no longer includes Anna Creek, is conditional upon Foreign Investment Review Board (FIRB) approval. The deal has been structured so the Treasurer doesn’t have to make a decision until after the July 2 election. Anna Creek is near the weapons testing site at Woomera in South Australia, and this was cited by Mr Morrison as a concern when he rejected the earlier sale.
S Kidman & Co chairman John Crosby said the board was pleased to have reached agreement on the sale terms with Dakang and Australian Rural Capital.
“The consortium and Kidman have complied with all requests that have been made by the FIRB and we believe the sale will secure the long-term future of the Kidman enterprise,” Mr Crosby said.
“We believe Dakang Australia and ARC will be good custodians of the business and this transaction will provide a solid platform for growth and, at the same time, an opportunity for Australians to participate in Kidman’s future.
“The significant investment proposed by the consortium will see an increase in production and the expansion of international markets for Kidman beef, the majority of which is already exported.”
Founded by the original “Cattle King” Sir Sidney Kidman 116 years ago, the company was expected to sell for at least $325 million but attracted much higher bids from a host of foreign and domestic parties including trucking magnate Lindsay Fox.
Other foreign groups included Donlinks Grain and Oil Company, one of China’s biggest vegetable oil producers in a joint venture with British Virgin lslands-registered Genius Link Capital. The joint venture offered a bid as high as $370 million.
Dakang Australia is 51 per cent owned by Dakang Pasture Farming and 49 per cent owned by Shanghai CRED Real Estate Stock Co. Dakang will acquire 80 per cent and Australian Rural Capital will acquire 20 per cent of the company.
“As long-term investors, Dakang Australia and ARC are looking forward to the opportunity to make a great Australian business even better,” Dakang Australia director Gary Romano said.
The Kidman board will recommend shareholders accept the offer subject to there being no superior proposal and that the transaction is permitted to proceed under Australia’s foreign investment legislation.
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