Port Adelaide backer’s consortium reaches deal to buy S. Kidman & Co pastoral empire
CHINESE company Dakang Australia and Australian Rural Capital have agreed to make a takeover offer to buy cattle company S. Kidman and Co for $370.7 million.
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A COMPANY part-owned by Port Adelaide’s newest sponsor Chinese billionaire Gui Goujie has entered a sale agreement with the South Australian cattle company S. Kidman and Co.
Chinese company Dakang Australia and Australian Rural Capital have agreed to make a takeover offer to buy the cattle empire for $370.7 million.
Mr GUI’s company Shanghai Cred Real Estate owns 49 per cent of Dakang, while Dakang (HK) Holdings owns 51 per cent.
The offer is conditional on approval by the Foreign Investment Review Board, as well as various other conditions and regulatory approvals.
Australian investors will be able to participate in the deal through ARC, a public company, which has also started raising money from Australian investors to help it finance the deal.
Under the sale agreement, the Kidman head office will remain in Adelaide, while the buyers intend to spend $46.3 million on capital improvements and restocking of the stations, providing an extra 50 outback jobs in the first year of ownership.
The takeover bid contemplates Dakang Australia buying 80pc and ARC 20pc of Kidman.
The two partners will jointly oversee the management and development of the
Kidman business, the nation’s fifth largest cattle company representing about .6pc of the national cattle herd of 28 million.
Kidman chairman John Crosby said the company was very pleased to have reached agreement on the sale terms with the consortium as its preferred bidder.
“The consortium and Kidman have complied with all requests that have been made by the FIRB and we believe the sale will secure the long-term future of the Kidman enterprise,” Mr Crosby said.
“We believe Dakang Australia and ARC will be good custodians of the business and this transaction will provide a solid platform for growth and, at the same time, an opportunity for Australians to participate in Kidman’s future.”
Mr Crosby said the significant investment proposed by the consortium will see an increase in production and the expansion of international markets for Kidman beef, the majority of which is already exported.
He said the Kidman board will recommend that its shareholders accept the consortium’s offer subject to there being no superior proposal.
An independent expert concluded that the offer is both fair and reasonable and the transaction being permitted to proceed under Australia’s foreign investment legislation, Mr Crosby said.
ARC is listed on the ASX and specialises in rural investments under its executive chairman James Jackson, also the deputy chairman of Elders Limited, and a former director and chairman of ASX listed MSF Sugar Limited.
Dakang Australia director Gary Romano said it is delighted to have Australian Rural Capital as its partner given its expertise in the local agriculture sector and the opportunity it will provide Australian investors to participate in the Kidman business.
Mr Jackson said it provides an excellent opportunity for Australian investors to participate in the growing international demand for Australian beef in partnership with committed coinvestors with significant supply chain experience in Asian markets.
Mr Romano and Mr Jackson said their ambition is for Kidman to become an even stronger player in Australia’s beef cattle sector, and transform it into a truly global brand for beef and related products, underpinned by a proud Australian heritage and outstanding operating capabilities.
Anna Creek station in South Australia will be separated from the other businesses and assets of Kidman prior to the completion of any acquisition of Kidman by the Consortium.
The sale agreement follows an extensive campaign by Kidman to secure a sale that the board considered to be in the best interests of shareholders and all Kidman stakeholders.
The shareholders of Dakang Australia are Hunan Dakang Pasture Farming Co Ltd’s (Dakang Pasture Farming) wholly-owned subsidiary, Dakang (HK) Holdings Ltd; holding 51 per cent and Shanghai CRED Real Estate Stock Co Ltd (CRED) holding 49 per cent.
Dakang Pasture Farming is listed on the Shenzhen Stock Exchange and has a market capital of about $3.75 billion.
Dakang Pasture Farming’s major shareholder is Shanghai Pengxin Group (Pengxin) which owns 55 per cent of Dakang Pasture Farming. The unlisted CRED is privately held and is one of the largest real estate developers in Shanghai with an increasing focus on international investment.
Mr. Romano and Mr. Jackson said on behalf of the consortium: “As long-term investors, Dakang Australia and ARC are looking forward to the opportunity to make a great Australian business even better, and to partner in the future prosperity of the States and Territory in which Kidman operates as well as the national economy.
“The Consortium is supportive of the current strategy and direction of Kidman and intends the business to be continued in its present form with the new owners providing opportunities to grow the business, both within Australia and ultimately internationally.
“We expect to be working very closely with the existing Kidman management and drawing on the commodity and trading expertise of ARC to realise the full potential of the business.”
The Federal Government stopped the sale from going ahead on November 19 last year, citing national interest grounds because Anna Creek station on the southwest corner of Lake Eyre is on the Woomera weapons testing range.
The famous outback cattle business owned by 58 shareholders, some comprising multiple family members, was put up for sale on April 10 last year,
It owns 160,000 cattle and 101sq km of leasehold land run as 17 properties in South Australia, Western Australia, Queensland and the Norther territory.
The Kidman business is the largest leaseholder of Australian pastoral land and has turned-off an average of about 50,000 tonnes of beef a year.
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