Foreign Buyers Barred From Acquiring Kidman

23 November 2015

According to the Australian Bureau of Statistics (ABS) approximately 87% of Australian agriculture land and businesses are Aussie owned. And while Australia welcomes foreign investment, that investment must be consistent with national interests.The Foreign Investment Review Board (FIRB) has disallowed the acquisition by foreign investors of S. Kidman and Co. Limited.  

In April 2015 Australia’s  largest private land owner, S. Kidman and Co. Limited, signalled that it was looking for a buyer. The land holdings  represent approximately 1.3 per cent of Australia’s total land area, and 2.5 per cent of Australia’s agricultural land. It includes 10 cattle stations, including properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411 square kilometres and managing a long-term average herd of 185,000 cattle.

Back in April, Kidman & Co Managing Director, Greg Campbell, said the sale representred a decision by the Kidman family members (which held approximately 98% of shares) to capitalise on the demand for quality Australian agricultural assets.

That capitaisation, though, won’t be to a foreign entity.

Recently it was reported that a bidding war for Kidman & Co had broken out between two Chinese player; Federal Treasurer Scott Morrison, though, had confired that he will uphold the Foreign Investment Review Board (FIRB) recommendation that the acquisition by foreign investors of S. Kidman and Co. Limited would be contrary to the national interest.

“One of Kidman’s stations, Anna Creek, is … 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,” said Minister Morrison.

“The WPA weapons testing range makes a unique and sensitive contribution to Australia’s national defence and it is 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.

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.”

Mr Morrison said that it was now a matter for the vendor to consider how they wish to proceed with offering the composite interests of S. Kidman and Co. Limited for sale.

How About Other Assets?

According to independent Seantor, Nick Xenophon, the government’s decision to block the sale of S. Kidman and Co stood in “stark contrast” to other foreign ownership decisions.

“What doesn’t make sense here is that an iconic cattle property is to be kept in Australian hands on national interest grounds, but a key strategic asset like the Port of Darwin is subject to a foreign takeover with barely a whimper form the Foreign Investment Review Board,” said Mr Xenophon.

“This is not about being anti foreign investment – it is about a level playing field. I can’t imagine the Chinese government would allow a foreign company to control the Port of Shanghai let alone one with links to the military.”

Industry Response

The National Farmers’ Federation (NFF) said that it respcts the federal government and FIRB’s right to make decisions regarding matters of national security, and will be looking for detail on next possible steps with regards to the sale.

Foreign investment in agriculture is always a senstitive matter because oif the need to balance the ational interst against the need to attract new capital intot he agricultural section,” said NFF CEO Simon Talbot.

“Agriculture is p the cusp of its boom cycle, but the need for capital investment is a significant roadblock to growth. To realise its potential the sector needs $1.2 trillion over the next 40 years, sourced both dometically and from overseas.”

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