Kidman bids close

28 Oct, 2015 01:00 AM
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One of the Kidman properties, Glengyle Station, Queensland.
Up to 12 bidders...are understood to be on the shortlist
One of the Kidman properties, Glengyle Station, Queensland.

THE bidding pressure for the big 115-year-old S. Kidman and Company cattle business gets serious this week as last bids for the purchase of the prized 10.1 million-hectare pastoral empire are locked in for consideration.

The family-owned empire and legacy of last century's "cattle king" Sir Sidney Kidman covers 10 property aggregations across about 17 pastoral holdings in South Australia, Queensland, Northern Territory and Western Australia, plus the "Tungali" feedlot in south-eastern SA and the south western Queensland bull breeding and cropping property, "Rockybank", near Roma.

Up to 12 bidders including investors from China and elsewhere in Asia, Canada the UK and South America are understood to be on the shortlist, selected to complete due diligence investigations into the business by the company and its sale managers EY (Ernst and Young).

However, some were considered possible withdrawals as the late October deadline neared.

The Adelaide-based S. Kidman business - Australia's largest private landholder - has not indicated what it expects the sale to be worth.

However, the company's own net asset valuation - more than $300 million - has provided a baseline indicator of what an eventual sale price is likely to start at.

The landholdings alone are valued at almost $200m, while the sale also includes about 156,000 cattle, which contribute to about 15,000 tonnes of annual carcase beef equivalent sales (of which a third is exported).

A final announcement on the successful buyer is expected in December, with the Kidman board due to start considering its options at meetings next week, before a bidder statement is made public later in November and a target statement is released by the company.

EY's head of transactions in SA, Don Manifold said while Australian agricultural investment names were notable among the parties invited to submit second round tender bids, some bidders were consortiums made up of Australian and offshore investor groups.

He said intense national and international speculation about who was on the shortlist had been "interesting".

One rumour involved a bid from the US Army, which he dismissed as well off the mark.

Chinese vegetable oil producer, Donlinks Grain and Oil Company, confirmed it was one of what is expected to be several Chinese parties in the Kidman contest, reporting to Shenzhen Stock Exchange last month it had partnered with the Virgin lslands-registered Genius Link Capital to hold a 51 per cent stake in a joint venture.

Other Chinese companies among the 30-plus potential investors understood to have run a preliminary ruler over the Kidman holdings prior to July included state-backed developer Shanghai CRED, financial services group Zendai and textile, metals and property conglomerate Shanshan Group.

The Chinese-based New Zealand farmland owner, Shanghai Pengxin Group, has also been linked in media reports about the sales of both the Kidman and Consolidated Pastoral Company (CPC) holdings.

Other potential international bidders include China's Rifa Australia, headed locally by former Macquarie Pastoral and Elders boss David Goodfellow, and UK private equity firm Terra Firma, the majority owner behind CPC.

Australian-based investors reported in the race range from Victoria's Baillieu family to mining magnates Gina Rinehart, Hugh Morgan, Andrew Forrest and Adelaide-based Robert Champion de Crespigny.

Mr Manifold said the Department of Defence would be involved in assessing the bidders given S. Kidman and Company's Anna Creek Station - the biggest cattle property in the world - sits partially within SA's Woomera rocket range.

The Foreign Investment Review Board must also give the green light to any foreign-owned bidders.

Although owned by about shareholders and trusts descended from Sir Sidney Kidman's immediate family in Australia, the UK and the US, the Kidman business is a publicly unlisted company and any eventual sale will require the new owner to own a minimum 90pc stake before compulsory acquisition of all remaining shares becomes a requirement.

Despite some family sector misgivings about selling the Kidman heritage and its successful beef operations, Mr Manifold said the decision to sell was backed by 98pc of shareholders.

The Kidman business made a net profit of $50m in the 2014-15 trading year, after bouncing back from a $1.3m loss the previous year.

A big improvement in cattle sales and values and directors' decision sell-off its share portfolio, including a raft of blue chip investments, helped bolster the books.

Destocking of the company's drought-pressured Queensland properties contributed largely to $62m in livestock sales - up from $56m last year.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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