The sale of the vast Kidman pastoral empire to the joint venture Outback Beef – led by Gina Rinehart’s Hancock with the Chinese-owned Shanghai CRED having a one-third interest – has passed the foreign investment hurdle.
Treasurer Scott Morrison has approved the deal after he rejected earlier foreign-controlled bids on national interest grounds. The bids, in two tranches, included three that were totally or majority Chinese, and one European bid.
The joint venture’s final bid was A$386.5 million. It had been marginally upped after a group of Australian families put in a last-minute counter bid.
The huge Anna Creek station with an associated property, The Peake, is being carved out and acquired by the local Williams family, who have adjoining land. The Woomera defence area overlaps part of Anna Creek, and national security was one factor in Morrison’s initial rejection of a sale.
Morrison said his earlier security concerns had been mitigated by the excision of Anna Creek.
He said the sale actually lifts local ownership of the original land area from about two-thirds to nearly three-quarters. This is because of the Anna Creek sale to locals. Kidman has had a significant level of UK ownership. The A$386.5 million includes the proceeds from selling Anna Creek and The Peake.
Morrison said the Australian-owned Hancock would control the board, as well as the day-to-day operation of the business. Kidman would remain an Australian incorporated company headquartered in South Australia.
The new owner has promised significant investment in the business, planning to increase the cattle herd by 20,000 over the coming 18 months. It has said it will invest up to A$19 million in capital improvements to boost efficiency and carrying capacity, creating 35 new full-time permanent jobs while also employing new contractors and short-term specialists.
Kidman is Australia’s largest private land owner with about 1.3% of the country’s total land area and 2.5% of its agricultural land – virtually all of it leasehold. It has 19 properties operated as 12 enterprises, including 10 cattle stations, a bull breeding stud farm and a feedlot.
The properties are in SA, Western Australia, the Northern Territory and Queensland. They cover more than 101,000km² and carry a long-term average herd of 185,000.
The divestment of the two stations will reduce the area to 77,700km².
Greg Campbell, managing director of S. Kidman and Co, said: “We’re relieved to have got to a point of conclusion after a long and difficult sales process”. Welcoming Hancock leading the joint venture, he said: “Mrs Gina Rinehart is a prominent Australian and we appreciate her desires to further invest and grow the business”.
Authors: Michelle Grattan, Professorial Fellow, University of Canberra