The Australian government announced Dec. 9 it has approved the sale of the country’s largest cattle ranch, S. Kidman and Co. Limited. The government had rejected prior purchase proposals as it was concerned about selling to foreign companies. While the latest proposal includes a Chinese investor, the majority stake will be owned by Australia’s wealthiest woman, Gina Rinehart, executive chairman of the Hancock Prospecting Group.
Under the proposal, the largest station in the Kidman group, Anna Creek and its outstation The Peake, will be acquired by the Williams Family, a local farming family with properties that adjoin Anna Creek.
The remainder of the S. Kidman and Co. Limited business will be acquired by Australian Outback Beef Pty Ltd (Outback Beef). Outback Beef is majority owned 67% by Hancock Beef Pty Ltd (Hancock), with a minority interest of 33% held by Shanghai CRED Real Estate Stock Co. Ltd (Shanghai CRED).
Australian-owned Hancock will control the board, and will control day-today operation of the business. Kidman will remain majority Australian owned under this proposal, and remain an Australian incorporated company headquartered in South Australia.
Outback Beef has made a commitment of significant investments into the Kidman business, with existing environmental and other commitments to continue to be honored.
“Three quarters of this country’s beef production is exported, and export markets are critical for the industry’s future,” Rinehart said. “We intend to provide additional investment in cattle and infrastructure, including technology improvements in our efforts to keep cost and quality competitive internationally”
Outback Beef plans to increase herd size by 20,000 head of cattle over the next 18 months. Outback Beef has indicated it will invest up to $19 million in capital improvements to increase efficiency and carrying capacity. The investment was also expected to create 35 new fulltime permanent jobs by June 2018, while also employing many more new contractors and short terms specialists.
The combined Kidman and Hancock herd will reach 300,000 head, placing Hancock in the top three beef producers in Australia.
“We are excited about the future, and looking forward to getting down to work with the Kidman managers, as soon as we receive PRC approvals, which are well progressed and expected shortly, to explore and drive technology and other improvements," Rinehart added.
Currently Kidman is 33.9% foreign-owned. With the sale of Anna Creek and The Peake, the proposal approved by Australian treasurer Scott Morrison represents a significant increase in overall Australian ownership from 66.1% to 74.7%.
“Consistent with the recommendation from the Foreign Investment Review Board (FIRB), I have decided that the acquisition of Kidman as proposed would not be contrary to the national interest and will be permitted to proceed as proposed,” Morrison said, adding that the proposal will be subject to standard taxation conditions. “Any future changes in ownership, including any increase in interest by Shanghai CRED, will require subsequent FIRB and Treasurer approval.”
The sale process was extensive and heavily scrutinized, and afforded ample opportunity for Australian bidders to participate, Morrison said. “Over the process as a whole, Kidman has spoken with over 600 potential bidders, and over 30 bids were received.”
Kidman is Australia's largest private land owner and holds approximately 1.3% of Australia's total land area, and 2.5% of Australia's agricultural land. Of this, 99.8% of Kidman land is held under leasehold arrangements. It has 10 cattle stations, including properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411 square kilometers and managing a long-term average herd of 185,000 cattle. This is a significantly larger than the next biggest rural landholding in the country, Morrison said.
“Previous security concerns that influenced my earlier rejections of sale proposals have been mitigated by excision of Anna Creek, the largest single property holding in Australia part of which is located in the Woomera Prohibited Area (WPA) in South Australia, from the proposed sale to Outback Beef.”
Australia welcomes foreign investment where it is consistent with our national interests, Morrison added.
“Foreign investment has underpinned the development of our nation and we must continue to attract the strong inflows of foreign capital that our economy requires. Without it, Australia's output, employment and standard of living would all be lower,” he said, adding, “We will continue to welcome and support foreign investment that is not contrary to our national interest.