A Chinese-led group has agreed to buy Australia’s most iconic cattle company in a deal valued at more than A$370 million ($288 million) after partnering with local investors. The venture, headed by a company controlled by Shanghai Pengxin Group, will purchase 80 percent of S. Kidman & Co, according to a statement on Tuesday [19 April 2016] to the Shenzhen Stock Exchange. Australian Rural Capital Ltd will take a 20 percent stake. The deal requires approval from Chinese regulators, and Australia’s Foreign Investment Review Board, which last year blocked the sale of Kidman to an overseas buyer on grounds of national security…Full Article: China Daily Apr 2016

Key Points

  • Australia’s Foreign Investment Review Board (FIRB) will consider the takeover bid for 90 days (~late April to late July).
  • Hunan Dakang Pasture Farming (controlled by Shanghai Pengxin, listed in Shenzhen) has a 51% stake in the Chinese portion of the agreement while Shanghai CRED Real Estate Stock (privately held) has the remaining 49% Chinese stake.
  • Founded in 1899 and headquartered in North Adelaide, South Australia, S Kidman & Co Ltd (Kidman) manages 101,000 sq. km. of land (~1.3 of Australia’s total area) and hosts 185,000 heads of cattle.

ChinaAg Comments

  • Australian Rural Capital (ARC), which is managed by James Jackson (livestock manager in northern New South Wales) and Stephen Chapman (chairman of Baron Partners), has been primarily focused on cotton but hopes to expand into beef, sugar, wine, and nuts.
  • In March 2016, Australian Rural Capital has announced it was partnering with Shanghai Pengxin Group to purchase S Kidman & Co Ltd (Kidman).
  • In November 2015, the Australian government vetoed the sale of S. Kidman and Co., a major cattle operator, on national security grounds. According to Australia’s Treasurer, half of Kidman’s Anna Creek pastoral lease lies within the country’s Woomera Prohibited Area (WPA) testing range in South Australia.
  • In August 2015, representative of S Kidman & Co Ltd stated that final bids to purchase the company will occur in late October 2015 at the earliest.
  • In March 2015, Australia passed a law requiring Foreign Investment Review Board (FIRB) approval for the sale of agricultural land valued over AUD 15 million (~US$10.8 million).
  • In late 2012, Shanghai Pengxin won a legal battle to purchase 16 North Island dairy (CraFarms) farms. The farms (8,000 ha and 16,000 cows) were purchased by Shanghai Pengxin’s subsidiary Pengxin New Zealand Farm Group.
  • Founded in 1997 and headquartered in Shanghai, Shanghai Pengxin owned more than 40 subsidiary companies as of 2015.  The conglomerate has businesses in real estate, mining, agriculture, and private equity.
  • Founded in 1997 and headquartered in Huaihua, Hunan Province, Hunan Dakang Pasture Farming (SHE:002505) is a producer of meat (pork, beef, sheep) and dairy products.

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