In accordance with a recommendation from the Foreign Investment Review board (FIRB), Australia’s Treasurer, Scott Morrison, announced that the Australian government has decided to ban foreign investors from the bidding process for S. Kidman and Co., stating that to allow the business to be acquired by a foreign party would be contrary to the national interest.

 

The decision handed down by Mr. Morrison has been a serious setback to the S. Kidman sale, which has attracted up to 12 bidders from Asia, Canada, the UK, and South America, and which has been in advanced negotiations with China’s Shanghai Pengxin, which has reported to have made an offer of $350 million for the business, and Hong Kong-based investment firm, Genius Link Asset Management.

 

Founded in 1899, S. Kidman is a cornerstone of Australian agriculture, encompassing 1.3% of the country’s total land area and 2.5% of the country’s dedicated agricultural land, including 10 cattle stations across South Australia, Western Australia, Queensland, and the Northern Territory covering 101,411 square kilometers and a herd of 185,000 head of cattle.

 

A main concern for government officials however, appears to be Kidman’s Anna Creek property, which is not only the single largest property holding in the country, but about half of its pastoral lease is located in the Woomera Prohibited Area (WPA) – the location of the WPA weapons testing range, in South Australia.

 

"The WPA weapons testing range makes a unique and sensitive contribution to Australia's national defense and it is not unusual for governments to restrict access to sensitive areas on national security grounds," Treasurer Scott Morrison said in a statement.

 

Mr. Morrison has left open the possibility that the sale could continue if S. Kidman were to be split up and sold in-part to foreign investors with the exclusion of the Anna Creek property, leading Kidman managing director, Greg Campbell, to say that the group will now meet with government officials to determine its range of options moving forward.

 

“We did think on balance these applications would pass scrutiny,” he told Guardian Australia. “We were at the fairly final stages of negotiations with a very short list [of bidders] who were at the higher price end of things and a big hold-up in proceeding through finalising [sic] sale was achieving these approvals. It was a surprise this morning but it’s just another roadblock we’ll have to work through.”

 

Although the move may appear to be targeted at preventing investors specifically from China from pursuing the deal ,  The Guardian reports that the Australian prime minister told reporters at the APEC conference in Manila, “You would be wrong to assume that there was only one foreign country associated with buyers, so there’s no issue of discrimination here, but plainly the Woomera prohibited area is called the prohibited area for a reason. I think what Scott has said in his statement, which I’m sure the owners will read carefully, is that there’s nothing to stop them to recalibrate or restructure the way in which they’re selling these assets and resubmit, so no doubt they will reflect on that.”