Kidman rejection didn’t hurt Chinese ties: Graeme Samuel

Rejecting a Chinese bid for S. Kidman & Co has not harmed Australia’s relations with China, according to Graeme Samuel.

Graeme Samuel says there is “very significant’’ foreign investment in Australia.

The man who conducted a review of the controversial sale process of S. Kidman & Co for the federal government says he believes Scott Morrison’s decision to oppose a Chinese consortium’s bid for the establishment cattle producer on national interest grounds has not harmed Australia’s relations with China.

In his first public comments on the process, former Australian Competition & Consumer Commission chairman Graeme Samuel said “sensibly minded’’ people in Chinese political and business circles understood the decision and would respect the government’s position.

His comments came as the Kidman board appointed a Canberra-based lobbying firm established by former NSW Liberal minister and powerbroker Michael Photios as an adviser on the sale process.

CapitalHill, which is run by well-connected lobbyist Nick Campbell, is believed to have met with advisers to Chinese firm ­Dakang Australia, a company owned by conglomerate Shanghai Pengxin and backed by Shanghai billionaire Gui Goujie, that had its $370 million offer for Kidman opposed by the Treasurer in late April.

The decision, made just before the election campaign, provoked a storm of protest in the business community that feared it would have devastating consequences for future Chinese investment in Australia and harm relations between the two countries.

“Governments make decisions in this area and it is seen as being an extraordinary spotlight or signal to particular jurisdictions. In the current case it is China. Sensibly minded people in China in the business community and government actually know what it is about. They know what are the issues being dealt with by government ... It is clearly a case-by-case basis,’’ Mr Samuel told The Australian. “We ought to frankly give our business and government counterparts in China more credit for understanding what foreign investment is about and the issues.’’

Dakang partnered with another Chinese firm and listed Australian rural group Australian Rural Capital in the bid and the consortium is still the front runner to buy the business in the absence of a higher offer.

However, ARC is expected to have to take a bigger stake in Kidman that the 20 per cent it proposed in the original deal. The consortium may also need to bring in another Australian partner to satisfy Mr Morrison’s national interest concerns.

Anna Creek — the largest of Kidman’s properties that overlaps with the militarily sensitive Woomera protected area in South Australia — has been sold to the Australian-owned Wil­liams Cattle Company.

In April Mr Morrison suggested that the Kidman empire should be broken up in order to attract more bidders, citing a review of the bid by Mr Samuel that found there was significant domestic interest in Kidman.

While Dakang Australia beat Hong Kong-based fund Genius Link Asset Management to buy the Kidman portfolio, trucking baron Lindsay Fox’s Linfox Group was a late contender, showing interest after Mr Morrison first knocked back the Chinese company’s bid in November.

The Kidman board has since decided against splitting its nine-station empire, claiming that much of the historic company’s value is embedded within its strategic network of geographically dispersed properties. The Fox family is understood to be maintaining a watching brief on Kidman and is in communication with the seller’s advisers, Ernst & Young.

But because of its low-ball offer the family has always remained secondary to the Chinese in negotiations.

“They haven’t had an opportunity to work on a proposal that is the main game rather than playing second fiddle,’’ said one source.

A spokesman for the family declined to comment.

Mr Samuel stressed that his role in the process was “very limited … to provide advice if Australians were given a fair chance to bid. I was not involved beyond that.’’

He said foreign investment in Australia was “very significant’’. “There are certain areas where there is a political or economic sensitivity,’’ he said.