Gina’s Kidman offer may not be a done deal

Kidman management won't  confirm the existence of any parties likely to emerge as potential counter bidders to Gina Rinehart's Australian Outback Beef, but said there was still room for another bid.
Kidman management won't confirm the existence of any parties likely to emerge as potential counter bidders to Gina Rinehart's Australian Outback Beef, but said there was still room for another bid.

Billionaire Gina Rinehart is quite likely to take ownership of S. Kidman and Company’s historic 10.1 million hectare outback beef business by Christmas - but don’t bank on it.

Other hopeful bidders continue lingering on the radar, despite several recent contenders conceding they cannot match the latest offer in the contentious sale saga.

Last week Mrs Rinehart’s Hancock Prospecting partnership with persistent Chinese investor, Shanghai CRED, locked in a binding bid implementation agreement with Kidman to pay its shareholders $365 million for the pastoral empire.

The deal depends on the Hancock-Shanghai partnership Australian Outback Beef (AOB) on-selling Anna Creek Station – equivalent to about 25 per cent of the current Kidman estate – with those sale proceeds also going to Kidman shareholders.

Contracts for the sale of the 2.4m hectare Anna Creek and its adjoining outstation, “The Peake”, are apparently already lined up with at least one potential, undisclosed, buyer.

Back in April the Coober Pedy-based Williams Cattle Company was poised to buy Anna Creek – the world’s biggest cattle station – prior to Kidman and Co’s sale plans for the rest of the business to a Chinese-Australian consortium being blocked by Canberra and both deals collapsing.

If regulatory approvals from the Foreign Investment Review Board (FIRB) and state governments now continue relatively smoothly the 18-month sale process could finally be wrapped up by December.

The Chinese government must also agree to the movement of private company cash from China will go to an appropriate offshore investment.

Kidman and Co chief executive officer, Greg Campbell, said the process was still subject to numerous approval stages and possible developments.

“But we’re thinking it may be finalised in a couple of months - not five or six,” he said.   

However, another all-Australian agribusiness syndicate involving several prominent farming families is set to up the ante with a counter bid reportedly worth as much as $375m.

The Brinkworth, Buntine, Oldfield and Harris families’ various livestock and cropping interests currently span vast areas of the Top End, South Australia, Central Australia, and NSW.

Their syndicate, formed in June and has been working towards making an unconditional bid for Kidman’s 16 stations in SA, WA, Northern Territory and Queensland, and a feedlot, and its 180,000 head beef herd.

It’s members include northern Australian beef producer, Stirling Buntine, whose family has extensive holdings in WA’s Kimberley region, while Tom Brinkworth and family run more than 300,000 sheep and 80,000 cattle on more than a million hectares in SA and western NSW, including famed 35,000ha Merino and cropping property “Uardry” at Hay.

Other partners are the Harris family whose beef, cotton and grain interests in North West NSW have expanded since 1989 to include NT properties and the prized beef and irrigated crop holding Gogo Station near WA’s Fitzroy Crossing, and the Alice Springs-based Oldfield family which has cattle stations and a livestock trucking business.

Kidman management and its sale manager Ernst and Young have “not been at liberty” to confirm the existence of any parties likely to emerge as potential counter bidders, but said there was still room for another bid.

Any offer superior to the deal proposed by the Australian Outback Beef partnership (which is 67pc owned by Mrs Rinehart’s Hancock Prospecting) would be presented to shareholders.

The stakes are getting too high for Australian Rural Capital (ARC) which was the 20pc partner involved in the previous $370m deal with Dakang Australia, whose Chinese backers included Shanghai CRED and Shanghai Penxing.

ARC chairman, James Jackson, said the latest “preferred bid” was effectively about $10m above the Dakang offer and it had the advantage of a prominent Australian investor holding a majority stake.

“It’s a deal we believe will be difficult to compete with,” he said.

However, he felt an all-Australian syndicate offering just $5m more may well have an even more competitive edge because no FIRB approval hurdles or Chinese government constraints would hinder the sale.

Meanwhile, crowdfunding property investor DomaCom has also abandoned its Kidman takeover ambitions after making a noisy attempt to rally “mum and dad” investors to put money into buying Kidman and Co and renting the land back to a major beef enterprise.

“Our Kidman bid demonstrated an enormous support for Kidman’s properties being owned by Australians and an appetite among investors to support agricultural assets,” said CEO Arthur Naoumidis.

“People were motivated by a desire to keep prime rural land in Australian hands, as well as the opportunity for steady yield and capital gain.”

Although the Kidman challenge was too big, DomaCom had been motivated to seek out new smaller scale farmland investment opportunities.