Gina Rinehart, Australia’s richest woman, is partnering with China’s Shanghai CRED Real Estate as she positions to make an expected $300 million bid for the S. Kidman & Co. cattle conglomerate.
Shanghai CRED was an original player in the three-way partnership with Shanghai Pengxin and Australian Rural Capital, whose bids for S. Kidman were twice rejected by Australian Treasurer, Scott Morrison.
The sheer size of the operation seems to be a detriment to a successful deal. S. Kidman encompasses a land area equal to 1.3 percent of the entire country, spreading across three Australian states and bordering upon an area prohibited by the Australian government. Because of this, the government harbors concerns that to sell the company as a single entity to a majority foreign owner would be contrary to the national interest. Kidman & Co. has already agreed to break off its Anna Creek property from the S. Kidman portfolio to satisfy government concerns about its proximity to the Woomera Prohibited Area, however, they are averse to any further breakup as it is believed it would negatively affect S. Kidman’s value.
Under the structure of the new proposed bidding agreement, The Australian reports that if successful, Gina Rinehart’s Hancock Prospecting will hold a two-thirds interest in Kidman while Shanghai CRED will hold the remaining one-third. This ownership ratio, and the close relationship existing between Ms. Rinehart and Mr. Joyce and other government officials will likely ease the government’s concerns regarding a foreign party owning such a nationally sensitive operation.
Ms. Rinehart’s move for S. Kidman is the latest in her campaign to build an Australian cattle empire as her focus shifts away from mining. In July it was announced that Hancock Prospecting acquired the Inverway and Riveren cattle stations in the Northern Territory totaling 550,000 hectares and a herd of 40,000 head of cattle from Indonesia’s Japfa Santori. Then, a week later it was announced that the group acquired Phoenix Park – a registered live cattle export yard and depot licensed for 20,000 head, that also includes a large-scale fodder growing operation.
The acquisition of such infrastructure is considered an indication of Rinehart’s goal of building an integrated supply chain, as these acquisitions combined with her existing portfolio, including the Liveringa, Nerrima, and Fossil Downs stations, bring her entire beef herd to nearly 100,000 head of cattle.
Beetaloo and Mungabroom for Sale
The Northern Territory cattle sector remains hot with the additional announcement that the Beetaloo and Mungabroom stations, backed by billionaire Brett Blundy are being offered for sale by the Dunnicliff family’s Barkly Pastoral Company at a target price of $200 million. Developed by the cattle pioneer, John Dunnicliff, and encompassing more than 1 million hectares, the property is considered some of the best cattle land in the state.
“Given the scale of the properties, size of the cattle herd and the extensive on-farm development Beetaloo is arguably one of the most improved large-scale cattle production businesses in Australia,” Ben Cameron with Bentley’s International, who has been appointed as an advisor to the confidential off-market sale process, told the North Queensland Register.
Over the past decade, the Dunnicliff family has invested $40 million in order to bring the number of watering points on the land from 40 in 2002 to more than 600 today, reports Beef Central. The project has brought watering points to 90 percent of the land and has lifted the station’s combined capacity from 20,000 head to 100,000.
The decision to divest the stations was made after the passing of Mr. Dunnicliff, who told Beef Central last year, “I think long term, if you want to utilise [sic] the land, you have to take the water to the cattle, you can’t take the cattle to the water. It doesn’t work.”
An investment overview document containing details about the stations and business assets will be available at the beginning of October to interested parties, from which a short list will be selected for due diligence beginning in January 2017.
—
Lynda Kiernan