Scott Morrison approves sale of S Kidman and Co. to Gina Rinehart

GINA Rinehart has praised Scott Morrison for allowing her to buy the S Kidman & Co. land and cattle empire, saying it will remain in ‘Australian control’.

Treasure Scott Morrison allows Gina Rinehart’s company to take S. Kidman & Co. Picture: Supplied

TREASURER Scott Morrison has approved the sale of the S. Kidman & Co, with some of the land and cattle empire to go to Gina Rinehart’s company.

Mr Morrison announced on Friday the largest station in the Kidman group, Anna Creek and its outstation The Peake, will be acquired by a neighbouring farming family — the Williams.

The rest will be acquired by Outback Beef, which is majority owned by Rinehart’s Hancock Beef with a minority interest held by a Chinese partner.

RELATED: Life on the S. Kidman & Co. outback station

Gina Rinehart comments on the sale of the S Kidman & Co. station. Picture: Supplied

Outback Beef is 67 per cent owned by Rinehart’s company Hancock Prospecting Pty Ltd (Hancock) and 33 per cent owned by Shanghai CRED Real Estate Stock Co Ltd (Shanghai CRED).

Mrs Rinehart entered a bid to buy S. Kidman & Co, one of the country’s largest cattle stations for $365 million in partnership with Shanghai Cred.

Under the proposal Hancock will control the board and day-to-day operations, meaning it will remain majority Australian-owned.

It has also offered significant investments, with commitments to increase herd size by 20,000 head of cattle over the next 18 months.

“Outback Beef has indicated it will invest up to $19 million in capital improvements to increase efficiency and carrying capacity,” Mr Morrison said in a statement.

Austalia’s biggest meat producers, S Kidman & Co Ltd, loading cattle.

“Importantly this investment will also achieve the creation of 35 new full-time permanent jobs by June 2018 while also employing many more new contractors and short terms specialists.”

As far as possible the extra jobs will be given to locals and Indigenous employees.

Mr Morrison said the decision to sell Anna Creek and The Peake to locals means there is a significant increase in overall Australian ownership from 66.1 per cent to 74.7 per cent.

He had originally blocked the land being sold to Chinese buyers.

“Consistent with the recommendation from the Foreign Investment Review Board, I have decided that the acquisition of Kidman as proposed would not be contrary to the national interest and will be permitted to proceed as proposed,” he said.

An aerial view of S Kidman & Co Ltd at the Helen Springs Station.

In another statement today, Hancock Chairman Gina Rinehart welcomed the Treasurer’s announcement, noting that the new ownership deal would reduce the amount of foreign ownership of the pastoral group – from its current approximately 34 per cent down to 33 per cent. Close to 99 per cent of Kidman’s existing shareholders have already accepted the AOB offer.

The acquisition will place Hancock in the top three beef producers in Australia, with a combined herd size growing to about 300,000 head.

“Three quarters of this country’s beef production is exported, and export markets are critical for the industry’s future,” she said in a statement.

“We intend to provide additional investment in cattle and infrastructure, including technology improvements in our efforts to keep cost and quality competitive internationally. The combined Kidman and Hancock herd will reach 300,000 head, placing Hancock in the top three beef producers in Australia. This will also see additional volume going through local downstream processing facilities to package Kidman branded beef products for export.

“The Treasurer’s approach to the sale of Kidman enabled a local Australian company to pay a fair market price and retain Kidman in Australian control.”

Treasurer Scott Morrison has given a greeen light to Gina Rinehart’s bid for S Kidman & Co.

Kidman is one of Australia’s largest beef producers, with an average herd carrying capacity of 185,000 cattle. The company has pastoral leases covering 101,000 square kilometres across South Australia, Western Australia, Northern Territory, and Queensland.

The Hancock family started their first cattle station in North West Australia and Mrs Rinehart has grown the portfolio ever since.

“Kidman is an iconic cattle business established more than a century ago by Sir Sidney Kidman,” Mrs Rinehart previously stated.

“It is an operation founded on hard work and perseverance by an outstanding Australian, and is an important part of Australia’s pioneering and entrepreneurial history.”

Workers on the Anna Creek cattle station, owned by cattle firm S. Kidman and Co., taking a break on the Oodnadatta Track in outback South Australia as they start the mustering of cattle by motorbike and plane June, 2000. Picture: AFP

Kidman Group Chairman, John Crosby said in a statement: “The Board, management, and staff of the company are very pleased that the Kidman head office and jobs will remain in Adelaide. Further investment into Kidman by the Hancock controlled joint venture has the potential to create another 100 jobs in regional communities over the next few years. Growth will also give a boost to suppliers and contractors to the beef industry and see additional utilization of local processing facilities and infrastructure.

“We welcome Mrs Rinehart, the Hancock Group and Shanghai CRED to Kidman and look forward to Mrs Rinehart visiting our headquarters in Adelaide in the near future.”

Garry Korte, CEO Hancock Prospecting added: “The acquisition of Kidman is transformational for the Hancock beef business and represents a significant step in the achievement of Mrs Rinehart’s strategy and vision for the cattle business. Her long family history in Pilbara stations, affected by drought over many years, as well as at times flooding and bushfires, made her appreciate the wisdom of Sir Sidney Kidman’s approach to mitigating the risk with stations being spread over different geographic and climatic regions.

Cattle on S Kidman and Co's Durrie station in outback Australia.

“The structure of the acquisition, involving less foreign investment than previously, and ensuring majority Australian shareholding with control in Australian hands, while at the same time facilitating quicker growth through access to additional export markets, may become a more palatable role model for future deal structures in Australia, where foreign ownership is concerned.”

More than 600 interested parties held discussions with sale manager Ernst & Young since the Kidman landholding went on sale almost 18 months ago.

The portfolio consists of 19 properties operated as 12 enterprises — ten cattle stations, a bull breeding stud farm and a feedlot.

In April, Mr Morrison rejected a bid by Dakang Australia Holdings Pty Ltd saying its planned purchase was contrary to the national interest.

“Previous security concerns that influenced my earlier rejections of sale proposals have been mitigated by excision of Anna Creek ... from the proposed sale to Outback Beef.” Kidman is Australia’s largest private land owner and holds approximately 1.3 per cent of Australia’s total land area and 2.5 per cent of the country’s agricultural land.

Originally published as Scott Morrison approves sale of S Kidman and Co. to Gina Rinehart