Gina Rinehart, Shanghai CRED Team Up to Acquire S. Kidman

Gina RinehartGina Rinehart, Australia’s richest woman, has joined up with Chinese real estate developer Shanghai CRED to acquire the largest land holding company in the country.

The joint deal to acquire S. Kidman & Co. was announced by the companies involved on Sunday. Its value is put at AU$365 million (US$276.8 million). The agreed deal will give Rinehart-owned Hancock Prospecting 67 percent stake in the leading cattle empire, while Shanghai CRED will control the remaining 33 percent stake.

The acquisition is to be overseen by a new joint venture called Australian Outback Beef. This was formed to tackle concerns by Australian government over takeover of local assets by foreign firms.

Importance of control over the domestic agricultural sector has been stressed by the Australian government. The country desires to preserve tax revenues in the country and to take advantage of rising demand for food across the globe. Australian Treasurer Scott Morrison has noted that the sale of Kidman’s expansive holdings to foreigners would not be in national interest.

The joint bid by Rinehart and the Chinese developer became the favorite to be considered after it emerged that Australian firm DomaCom had decided against raising fund to acquire S. Kidman. Reuters also reported that rival bidders Hunan Dakang Pasture Farming Co. Ltd (Dakang) and Australian Rural Capital Ltd (ARC) has indicated they would not launch a counter offer.

Sources had disclosed back in August that Hunan Dakang was planning a fresh offer in collaboration with Australian investors.

Kidman’s cattle rearing history goes back to more than 100 years ago. The company’s pastoral leases cover an area estimated at 101,000 square kilometers (39,000 square miles). The holding size is compared to the overall size of South Korea. The company is reported as having an average beef herd-holding capacity of around 185,000 cattle.

The heated debate over sale of important Australian agricultural assets to foreign companies had contributed to the government’s rejection, in April, of an AU$371 million ($281.3 million) bid by a group led by China’s Shanghai CRED. The joint bid, which also featured Hunan Dakang and a 20 percent Australian minority interest, was the second by the consortium to be rejected in six months.

To deal with concerns over acquisition of domestic assets by foreigners, Kidman has already reached an agreement with an Australian buyer over sale of its Anna Creek Station. The country’s government appears concerned over the proximity of the world’s largest working cattle station to its Woomera weapons testing site.

The Anna Creek Station sale would need to be completed for the Hancock-Shanghai CRED deal to be finalized, according to CNBC. Income from the sale and that of another station will go to Kidman and be retained for Australian Outback Beef.

Regulatory approval will also be needed for the Kidman deal to be finalized. But there appears to be no potential for issues in that direction given the resulting joint venture will have majority of its stake controlled by an Australian company.

Forbes says Rinehart is the richest woman in Australia, with an asset value estimated at slightly over $11 billion.