Kidman to seek new buyers, plans to stick to Dakang price

Buyers from Australia, Chile, US and New Zealand will not be subject to the FIRB review that derailed the sale to a Chinese-led consortium.

The owners of Australia’s largest cattle ranch portfolio will seek a new buyer for the S Kidman portfolio, after a sale to a Chinese-led consortium was scuttled by the Federal Investment Review Board (FIRB).

Dakang Australia dropped its bid this week to acquire the cattle stations after Australian Treasurer Scott Morrison delivered a preliminary rejection of the deal, on the grounds that the sale of such a large property (more than 1 percent of Australia’s total land) to a foreign owner would be counter to national interests.

S Kidman will now seek a local buyer, chief executive Greg Campbell told Agri Investor, or one that is majority-owned by Chilean, US or New Zealand interests. Agricultural investments valued below A$1.1 billion ($820 million; €720 million) from those countries are exempt from FIRB review, as part of international trade agreements.

However, Campbell said the deal between S Kidman and Shanghai Pengxin-backed Dakang Australia establishes a market value for the property that the current owners will stick to. “Any reduction of competition and competitive tension among bidders potentially reduces a sale price,” Campbell told Agri Investor. “The Kidman shareholders however, own a profitable business, are not desperate sellers and will not accept any material discount on the price which has now been set by foreign bidders.”

Government pushback against successive attempts by China-based Shanghai Pengxin to acquire the property (first directly, and then as the majority backer of a consortium) could discourage foreign-backed companies from a new round of bidding. According to reports, offers from Australian buyers were significantly lower than Dakang Australia’s A$371 million.

Dakang Australia plans to develop a new proposal to acquire the land, according to the Sydney Morning Herald. However, it will not come until after elections in early July.

Critics of Australian Treasurer Scott Morrison’s rejection of the sale have charged that it was a politically motivated move in advance of a national election. Campbell compared it to the 2013 rejection of a A$3.4 billion bid by Archer Daniels Midland to acquire Graincorp, which was also before an election.

“It would now be a sensible recommendation for a foreign investor requiring approval for a large agricultural deal not to apply for the Australian Treasurer’s approval within 12 months of an Australian election,” said Campbell.