SEVERAL years of simmering tensions have erupted into a nasty split among descendants of "cattle king" Sir Sidney Kidman as his family's famous and vast pastoral company operation confirmed late last week it is up for sale.
While a sizeable potion of the extended Kidman family's shareholder base strongly opposes selling the 116-year-old pastoral empire, rural property and agribusiness industry, observers say the timing could hardly be better given current international and local interest in beef production.
On the back of improved seasonal conditions across much of the Kidman estate and declining exchange rate trends, the sale of Australia's biggest land area - almost two per cent of the continent - plus 185,000 beef cattle is sure to attract huge interest, particularly from offshore.
S. Kidman and Company officials have not identified any potential front-runners interested in the business, but concede the family enterprise, like many other agribusinesses, received unsolicited approaches from local and overseas inves- tors in the past 18 months.
Last year speculation emerged about some family members holding possible part-sale talks with London-based private equity company Terra Firma, which owns rival big beef cattle business Consolidated Pastoral.
Details of the full sale proposal will be released with a tender memorandum by Ernst and Young next month, although many family shareholders are believed to have only agreed to the plan to end ongoing agitation from some within their ranks who are eager to test the market and/or cash in.
Sir Sidney's descendants, some of whom work for the company, own 98 per cent of the iconic Kidman and Company business founded when the former drover and livestock trader took full control of the pastoral enterprise he and his brother Sackville had established in the 1880s.
Kidman's 100,000 square kilometres of pastoral land is spread over 16 properties and outstations in three states, producing about 15,000 tonnes of carcase beef each year, including about 1.3pc of Australia's boxed beef exports.
Last financial year Kidman and Company reported a net operating cash flow of $9.3 million and paid dividends of 20 cents a share worth a total $2.36m.
But it recorded a net after tax loss of $1.4m as herd numbers declined 15pc because of tough seasonal conditions to 182,350 head and its livestock market value fell about $10m to $97.4m.
The entire Kidman business is to be offered for sale by tender as a going concern, including stock, plant and property, with the official line being no consideration has been given to hiving off any holdings for a partial sale.
However, the family's decision to sell is not unanimous, despite behind the scenes lobbying over several years from some shareholders keen to cash in before generational growth dilutes their potential share returns further.
With a big percentage of shareholders still wanting the geographically diverse beef business to continue as a family venture taking full advantage of burgeoning global market opportunities, many are understood to prefer to see the willing seller faction quit the business with an appropriate payout.
Others have taken financial advice with the view to investigating all sale options, including inviting in new equity partners to help expand the operation.
One family member confided that given all signs were pointing to a bright long-term future for beef demand and the industry "it's no wonder a decent portion of shareholders are against a sale".
Some feared the healthy business was being unreasonably pushed towards a fire sale.
"It's such a tragedy. After everything Sir Sidney achieved and what he built for Australia, this sale process has come about due to the selfishness of descendants who can't see the bigger picture," the family member said.
Among those at the centre of the storm is former family board director and Adelaide-based company livestock marketing manager, William Abel-Smith, who failed to win majority voter support for his board job at last November's annual general meeting.
Mr Abel-Smith is a strong supporter of the proposed sale.
Company details lodged with the Australian Securities and Investments Commission (ASIC) show new directors Mark Grimshaw from Koroit in Victoria's Western District and UK shareholder Richard Bourne-Arton from Yorkshire joined the board this year, replacing Mr Abel-Smith and Joanna Clover from the UK, who stood down on December 31.
The Adelaide-based Kidman company's official comment about the sale has noted family members wanted to capitalise on the present demand for quality agricultural assets and global demand for beef.
"Many of the family have other existing investments in Australian agriculture and elsewhere and the sale will allow them to convert long term capital gains into cash to support their other businesses and investments," said managing director Greg Campbell.
He said while news of the sale may have come as a surprise, given the Kidman family's long involvement in the Australian cattle industry, "everybody understands the shareholders have the right to sell the business".
"The company is in excellent financial shape, being debt-free with no mortgages over any assets," Mr Campbell said.
"Our business strategy, which was largely set in the early days of the company, has stood the test of time."
The Kidman property portfolio's geographic spread into northern Australia also provides ready access to live export markets and a natural hedge against seasonal variations across the continent.
Until recently bulls servicing the Kidman herd were bred near Condobolin in NSW, but now most of the Kidman herd is bred in outback regions and fattened on the naturally irrigated floodplains of western Queensland's the three big rivers.
The company has described its sale as an unprecedented opportunity for an investor to acquire a "well-balanced, large scale, professionally managed portfolio of genuine blue ribbon Australian cattle properties, and a small slice of Australian history".
Kidman cattle were highly regarded and the company brand was well known at saleyards and in the feedlot sector within Australia and South East Asia.
Overseas eyes likely to fall on massive cattle opportunity
VETERAN rural property broker Bruce Gunning says the Kidman family's decision to sell its massive 11 million hectare inland beef cattle operation is likely to be warmly greeted by a select band of big money investors who badly want to get into the beef business.
"They're not in the market for Holden car-sized properties, they want road train-sized operations," said Mr Gunning, the Sydney-based selling principal with Ray White Rural.
He said while up to 80 per cent of current buyer interest in pastoral country, particularly in northern Australia, was from overseas, in some regions local investment interest was diverting from mining to agriculture.
"The strongest inquiry we're seeing for rural property at the moment is for beef cattle operations," Mr Gunning said, noting offshore interest came from Asia, the US, mainland Europe and the UK.
"And it's really picked up lately. We've seen more inquiry in pastoral properties in northern Australia in the past six months than we saw in the previous six years."
Interest in Australian agricultural land was being fuelled by the 25pc to 30pc drop in the Australian exchange rate against the US dollar, making rural investment increasingly attractive for overseas buyers who also had the advantage of even lower borrowing costs on their money than were available in Australia.
"Their money's not making anything in the bank, but if they buy a good-sized beef concern with economies of scale in Australia they get immediate cashflow and long-term capital growth," he said.
"That cash flow's what really interests them.
"There will be buyers out there who are very interested in the Kidman operation because they want big numbers of cattle on well-established stations with plenty of built-in risk management strategies."
While these top-shelf buyers were a select group, they recognised Australia was "desperately short of cattle" after several years of drought-forced destocking and rampant export growth and Asia had developed "a taste for beef patties", especially if the meat came from Australia.
Record-high beef price and recovering land values had created bullish new market dynamics for big grazing holdings, now in demand ahead of high rainfall cropping land and dairy farms.
Rebounding cattle markets have led to big name producers including Terra Firma's Con- solidated Pastoral Company, North Australian Pastoral Company and smaller private operators such as media marketer Harold Mitchell, look to take advantage of the mood by either selling some of their assets or taking new equity shares in their businesses for the purpose of expanding.