Chinese will resubmit S.Kidman & Co offer after election

 

The Chinese-led consortium that wants to buy the giant S.Kidman & Co property business is expected to pull its $370 million bid and resubmit it after the election.

The revised bid is likely to include the sweetener of an increased proportion of Australian ownership.

The consortium includes the listed Australian Rural Capital, which is in a trading halt pending the announcement, and Chinese group Dakang, which is owned by Pengxin and Shangahai CRED.

S.Kidman & Co, which covers almost 11 million hectares of cattle stations – including the world’s largest, Anna Creek – was offered for sale this time last year but a foreign bid to buy the company was blocked by Treasurer Scott Morrison in November because of national interests. A revised bid which included an agreement to not buy Anna Creek was also found not to be in the national interest last Friday.

The Chinese consortium’s decision to withdraw its bid will need approval of the corporate regulator and is likely be resubmitted after the federal election, which could be called as early as this week for July 2.

RISKING A KNOCK BACK

The Chinese consortium and the board of S. Kidman & Co are unlikely to call the Treasurer’s bluff and keep the bid agreement in the current state, risking an official knock back between now and the time the Treasurer is required to make a final decision – July 26.

Sources said powerful interests looking to buy the Kidman properties, which cover 2.5 per cent of Australia’s agricultural land, had been trying to politicise the foreign investment angle of the purchase to prevent the Chinese bid progressing. Other major transactions by the Chinese such as Moon Lake’s purchase of the Van Dieman Land Company for $280 million have attracted similar levels of public attention but have been approved.

If the agreement, revised or not, is again knocked back by government S.Kidman & Co will still be unlikely to attract a competing offer. Under the agreement between S. Kidman & Co and the Chinese-led consortium more than $3 million in break fees would have to be paid to China’s Dakang and its consortium partner, the listed Australian Rural Capital, if a competing proposal is accepted within the next 18 months. Ashurst is advising Dakang and HWL Ebsworth Lawyers is advising S. Kidman & Co.

NATIONAL INTEREST

The Chinese-led consortium had until Tuesday to respond to the Treasurer’s concerns about its bid.

“My preliminary view of the proposal that has been put to me is contrary to the national interest,” Mr Morrison said last Friday.

The national-interest 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.

The Treasurer also called for an independent review on the transaction.

 

Read more: http://www.afr.com/real-estate/chinese-will-resubmit-skidman–co-offer-after-election-20160501-gojno3#ixzz47aYf7Xkz

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