Kidman bidders likely to revise $370m offer

Kidman bidders likely to revise $370m offer


Agribusiness
Kidman management is reluctant to break up the company’s 10 property aggregations covering 11 million hectares any further.

Kidman management is reluctant to break up the company’s 10 property aggregations covering 11 million hectares any further.

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The $370m Chinese-led bid for the historic S. Kidman and Company is unlikely to be ditched, despite Treasurer Scott Morrison last week pulling the rug out from under the plan.

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The $370m Chinese-led bid for the historic S. Kidman and Company is unlikely to be ditched, despite Treasurer Scott Morrison last week pulling the rug out from under the plan.

Mr Morrison and other senior federal government figures have expressed concerns the Kidman company’s preferred buyer - a syndicate involving Dakang Australia and its 20 per cent partner Australian Rural Capital (ARC) - had not allowed for enough local investor involvement in the huge outback pastoral estate.

Although a government review of the Kidman sale process had only just started, Mr Morrison announced last Friday his “preliminary view” of the proposal was that such a big land sale to a foreign-base group was contrary to the national interest.

However, Kidman management is reluctant to break up the company’s 10 property aggregations covering 11 million hectares any further.

It has already carved off almost 25pc of its land (Anna Creek Station) for a separate sale in an attempt to nullify national interest concerns.  

A revised bid, is believed likely to be submitted by Dakang in the new financial year so it can still buy Australia’s largest privately-owned agricultural property holding, but in partnership with a bigger proportion of Australian ownership.

Kidman and Co and the Dakang syndicate were invited to officially respond to Mr Morrison by Tuesday this week.

Dakang, is majority owned by the Shanghai Pengxin partnership which was on the original shortlist for Kidman and Co before that sale deal was also blocked late last year by Mr Morrison, on the advice of the Foreign Investment Review Board (FIRB).

Property investor and Kidman ownership aspirant, DomaCom, welcomed Mr Morrison’s announcement last week saying Canberra appeared to be heeding an outpouring of public sentiment on the proposed $370.7 million sale to the Chinese-led group.  

Since December Melbourne-based DomaCom, a managed investment trust group, has been rustling up pledges from small scale investors to bid for the Kidman and Company business.

It’s also expects to open up its bid to mainstream superannuation investors and superannuation companies.

However, DomaCom has been frozen out of any meaningful discussions with Kidman and Co management to date.

Melbourne-based DomaCom chief executive officer, Arthur Naoumidis, said it was “very pleasing” to hear the government’s latest commentary on the sale.

He said the Treasurer’s announcement could breathe fresh life into DomaCom plans for local investors.

DomaCom wants to split the Kidman land and the business, then float the beef enterprise on the stock market.

Investors buying units through DomaCom are being promised a potential return of about eight per cent in rental earnings from the listed Kidman business.

If the Dakang deal, revised or not, is again knocked back by government industry observers believe S.Kidman and Co will be unlikely to attract a competing offer.

Under the agreement between Kidman and the Chinese-led consortium more than $3 million in break fees would have to be paid to Dakang and ARC, if a competing proposal is accepted within the next 18 months.

Sources said powerful interests looking to buy the Kidman properties, which cover 2.5pc of Australia's agricultural land, had been trying to politicise the foreign investment angle of the purchase to prevent the Chinese bid progressing.

Other major transactions by the Chinese such as Moon Lake's purchase of the Van Dieman Land Company for $280m have attracted similar levels of public attention but have been approved.

The story Kidman bidders likely to revise $370m offer first appeared on The Land.

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