Property

Govt blocks Kidman sale to foreign buyers

Beef Central, 19/11/2015

kidman-aerial-mustering

 

IN A surprise decision this morning Federal treasurer Scott Morrison has vetoed the sale of Australia’s largest land holding, S Kidman & Co, to Chinese buyers.

The decision follows a recommendation against the sale by the Foreign Investment Review Board.

“I have decided that the acquisition by foreign investors of S. Kidman and Co. Limited would be contrary to the national interest and shall not be authorising the sale to proceed as currently proposed,” Mr Morrison said in a statement this morning.

Kidman is Australia’s largest private land owner and holds approximately 1.3 percent of Australia’s total land area, and 2.5 percent of Australia’s agricultural land.

The company has 10 cattle stations, including properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411sq km 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.

One of Kidman’s stations, Anna Creek, is also the largest single property holding in Australia. Importantly, around 50 per cent of the Anna Creek pastoral lease is located in the Woomera Prohibited Area (WPA) in South Australia.

National security concerns played a role in the decision, Mr Morrison said.

The nearby WPA weapons testing range makes a unique and sensitive contribution to Australia’s national defence, he said, adding that it was “not unusual for governments to restrict access to sensitive areas on national security grounds”.

“Given the size and significance of the total portfolio of Kidman properties along with the national security issues around access to the WPA, I have determined, after taking advice from FIRB, that it would be contrary to Australia’s national interest for a foreign person to acquire S. Kidman and Co. in its current form,” Mr Morrison said.

“I note that following communication of my decision all bidders to acquire S. Kidman and Co. Limited have elected to withdraw their FIRB applications prior to my Final Order being formalised.

“It is now a matter for the vendor to consider how they wish to proceed with offering the composite interests of S. Kidman and Co for sale. I will consider any such future alternate proposal or set of proposals on its merits, consistent with my obligation to ensure that, any such sale is on terms that are not contrary to the national interest.”

Mr Morrison said Australia welcomed foreign investment “where it is consistent with Australia’s national interests.”

“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.

“Foreign investment rules facilitate such investment while giving assurance to the community that the investment is being made in a way which ensures that Australia’s national interest is protected.

“Under the Foreign Acquisitions and Takeovers Act 1975, all foreign investment applications are examined against Australia’s national interest.

“This test includes a range of factors including: the impact of the proposal on the Australian economy and community; national security; consistency with other government policies including tax; competition; and the character of the investor,” Mr Morrison said.

“We will continue to welcome and support foreign investment that is not contrary to our national interest.”

Two Chinese companies, the Genius Link Group and Shanghai Pengxin, have reportedly made offers worth over $350 million each for the vast cattle enterprise.

In a significant parallel, the New Zealand Goverment recently rejected a Chinese bid for one of the country’s largest grazing landholdings, after it was earlier passed by the country’s equivalent of the FIRB. Click here to view Beef Central’s article on the sale of NZ’s Lochinver Station to an NZ domestic buyer.

Kidman & Co issues statement

Kidman & Co issued the following statement this morning following Mr Morrison’s decision:

Kidman & Co has been advised that the Commonwealth Treasurer has indicated that the acquisition by foreign investors of S.Kidman & Co would be contrary to the national interest and will not be authorising the sale to proceed as currently proposed.

The FIRB, through the Treasurer, cited concerns over the portion of Anna Creek Station within the occasional use “green zone” of the Woomera Prohibited Area, and further concerns over the land area within the Kidman portfolio of remote arid zone properties. Kidman & Co acknowledges the Government’s concerns and will seek clarity around those concerns and the deal parameters, so that stakeholders can continue to work with the Government in good faith to reach a satisfactory outcome.

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Comments

  1. Michael Vail, 03/01/2016

    Yes, just returned from a month in China. JV’s and ‘Partnership’ style ventures to tap into local expertise are being widely discussed

    They have Equity Capital and Debt Capital looking for a ‘home’, and just wanted to mitigate risk by partnering with those who understand, and will put a share of risk-capital on the table.

    They do not want to own it all. Just be able to access clean, green food product.

    Everyone wins!

    Everyone goes forward together!!

  2. Bill Loughnan, 25/11/2015

    The reality is that Australian agriculture has always needed capital input that simply can’t be sourced locally. While the Federal Government’s decision caught many by surprise and seems totally opposite to the policies previously outlined, the refusal shouldn’t be seen as the death knell to foreign investment – particularly from China. The solution for similar applications to prove successful in the future may simply involve joint ventures with Australian\accepted partners – think “Cubbie”.

  3. Peter Vincent, 19/11/2015

    I suggest that unless investment comes from a sovereign company, the buyer of any product from the landholding, factory, fishery etc will go to the highest bidder. It is foolish to believe that Chinese investors act in the interests of China. At some point in the future it is likely that the private investors will become permanent residents and possibly naturalised citizens. What is more important from Australia’s perspective is to have Customs, Immigration and Police services develop close relationships with Chinese authorities in order to ensure an investment is not funded by criminal activity. The FIRB must be aware of ALL information relating to both the investment and the investor. Within three months of the former Treasurer determining that transfer of 38 properties to Chinese investors had contravened foreign investment law and must be sold by the buyers within three months, applications for Australia’s Significant Investor visa came to an abrupt halt. Pure coincidence I imagine.

  4. Michael Vail, 19/11/2015

    Too much xenophobia. They cannot take the land with them. The cattle still need to be mustered, drafted, and processed somehow. All that money still stays in Australia. What is different? The Americans, and British OK. Why not China after ChAFTA? These are our new, big trading partners, right? Get your sights off your feet, and look to the horizon, and to where we as a nation are headed! Please …

  5. Samantha Lamond, 19/11/2015

    I agree we need investment, but need it be 100% foreign? How about 49% as in New Zealand? If we sell all or the majority of our assets we will loose control of our food security. In a world where the competition for food is beginning to ramp up, the owners of the land will rightly be able to produce, export and sell their agricultural products to the people of their own country. Australian’s will not have access to these products at all.

    This is a long term (25 year plus) strategy being implemented by a number of countries. It is not malicious, it is just reasonable and clear planning in a world whose resources are finite. Our own government needs to also think of our future food security by keeping agriculture predominantly Australian owned and bolster the industry through clever, long term structural improvements.

  6. Daniel Marshall, 19/11/2015

    So Australian commercial and residential property is OK.

  7. Michael Vail, 19/11/2015

    $360.0-million AUD is fully priced WIWO; so a shame really, as the sale should have gone ahead, Subject to certain stringent conditions. Of course, we do not know all the facts upon which the decision to with-hold approval of sale, we’re made. However, we desperately need foreign investment in the pastoral areas in infrastructure and development to reach our full potential, albeit in a sustainable way.

    Just a few thoughts. Any ideas out there …?

    Stand by for our update, following a lengthy interview this morning with Kidman’s Greg Campbell, to be published in our regular daily email news alert Michael. – Editor

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