Dakang Australia Holdings has withdrawn its offer for S.Kidman & Co, in the wake of Friday’s surprise announcement by Federal Treasurer Scott Morrison that the sale would not be approved, on the basis of being ‘contrary to the national interest.’

It has been confirmed this afternoon that Dakang has withdrawn its current application to the Foreign Investment Review Board, and all parties, including Australian Rural Capital Ltd, will terminate the Bid Implementation Agreement executed on 19 April.

The Treasurer cited his main concern as being that the property portfolio had been offered as a single aggregated asset, which he believed had made it difficult for Australian bidders to be able to make a competitive bid. He gave the consortium 96 hours to respond.

In a response issued this afternoon, S. Kidman & Co said it had consulted extensively with its preferred bidders following the Treasurer’s preliminary view was announced last week.

Kidman managing director Greg Campbell said that faced with such tight timelines, withdrawing the FIRB application and terminating the BIA was really the only option available. However, he said despite the Treasurer’s view, the Kidman family shareholders had over the weekend shown ‘firm resistance’ to seeing the 120-year-old company broken up.

“Kidman is typical of many large agricultural pastoral holdings in that the value of the business comes from the strategic advantage in having a geographically spread portfolio of properties,” Mr Campbell said.

“The integrated cattle production system provides economies of scale, and flexibility in managing cattle movements between locations to maximise the use of feed resources, mitigate the impact of poor seasons and provide access to a range of end markets,” he said.

A break-up of the business to sell properties separately would result in significant reduction in Kidman’s value, reduced production of up to 3000t of beef per annum, the loss of 50 jobs from the present structure, and lower tax revenue for the country.

“This also means that the consortium’s proposed A$46 million in new capital investment to support growing the herd to 220,000, and the addition of up to 50 new jobs in northern Australia, would not go ahead.”

He said the Kidman board would continue its discussions with the preferred bidders to address some of the concerns raised by the Treasurer notwithstanding Kidman is no longer bound by the relevant exclusivity provisions.

Mr Campbell said Kidman would also be seeking some clarity from the Australian Government around the level of foreign investment that was deemed acceptable. S.Kidman & Co is currently 34% foreign owned.

“Over 130 Australian parties were approached as part of the initial sale process that commenced inApril 2015, with late stage Australian parties also given the opportunity to acquire the business through the opening up of a secondary process in March 2016,” Mr Campbell said.

“It is important to note that no final bids were received from Australian parties at any time during the extensive and lengthy sale process.”

“Consistent with the initial transaction process undertaken by Kidman and Ernst & Young, Australian parties remain welcome to come forward and express interest in acquiring the business in its entirety,” Mr Campbell said.

“We also welcome interest from anywhere around the world, including the USA, Chile and New Zealand. Investment by non-government entities at this scale from these countries requires no approval from the Foreign Investment Review Board or the Treasurer.”