JAMES Jackson’s Australian Rural Capital (ARC) is providing a 20 per cent local stake in a Chinese-led deal to buy the S. Kidman and Company pastoral business for $370 million.
A complicated joint venture will see Shanghai Pengxin indirectly control 80 per cent of the cattle empire which currently covers about 11m hectares in South Australia, Queensland, Northern Territory and Western Australia.
The buyers plan to spend an additional $46.3m on capital improvements and extra livestock in their first year of ownership.
An additional 50 jobs are also expected to be created on Kidman properties.
A five-year strategic plan will also be put together with current Kidman and Co management to develop new growth opportunities for the company’s beef business domestically and overseas.
Anna Creek Station, covering 23,677 square kilometres (almost one quarter of the pastoral company’s total land area) near the Woomera defence facility, will not be included in the sale to the consortium.
Mr Jackson’s Australian Securities Exchange (ASX) listed investment group, in partnership with Dakang Australia, has entered a bid implementation agreement with S. Kidman and Co to buy all ordinary shares for $31.38.
The offer, which values Kidman at $370.7m, is conditional on Foreign Investment Review Board (FIRB) approval and consent from regulatory bodies.
The deal also needs approval from the board and shareholders of Shenzhen-listed Hunan Dakang Pasture Farming Company, which is 55 per cent controlled by Shanghai Pengxin.
The Kidman pastoral business is Australia’s biggest private landholder with the fifth largest cattle herd based on 10 stations, a feedlot and a bull breeding farm.
Dakang Australia and ARC will jointly oversee management and development of the Kidman beef business and will keep its head office in Adelaide.
Among other rural investments, ARC is a major shareholder in Namoi Cotton and has also promoted a breakaway share structure for the co-operative controlled SunRice.
It’s executive chairman and former investment banker, Mr Jackson, is also deputy chairman of Elders and a former chairman of MSF Sugar.
He said the deal would be an excellent long term opportunity for Australian investors to participate in the growing international demand for Australian beef in partnership with committed coinvestors.
Darkang and its parent company had significant supply chain experience in Asian markets.
Mr Jackson said the consortium respected the heritage of the Kidman business and would continue its operations in their current form, recognising the skills and experience of management and employees.
“We intend that the business be continued in its current form, informed by a strategic review to be completed post transaction,” he said.
“Kidman’s existing involvement in community and educational programs, such as those providing scholarships and training to agricultural students are expected to continue.”
The Kidman board has recommended shareholders, who are mainly descendents of cattle king, Sir Sidney Kidman, accept the consortium's offer.
However, its support is subject to no superior offer being made, and an independent expert concluding it is both a fair and reasonable offer, and the deal being approved by government authorities.
Kidman chairman, John Crosby, said the family company was “very pleased” to have reached agreement on the sale terms with the preferred bidder.
“We believe Dakang Australia and ARC will be good custodians of the business and this transaction will provide a solid platform for growth,” he said.
“At the same time, it provides an opportunity for Australians to participate in Kidman’s future.”
The significant investment proposed by the buyer partnership would see more in beef production and new international markets for Kidman beef, most of which was already exported.
The Kidman and consortium parties had complied with all requests made by the FIRB and believed the sale would secure the long-term future of the Kidman enterprise.
Dakang Australia director, Gary Romano, said his company board was delighted to have ARC as a partner given its expertise in the local agriculture sector.
Mr Romano and Mr Jackson said their ambitions were for Kidman to become an even stronger player in Australia’s beef cattle sector.
The partnership wanted to transform the historic business into a truly global brand for beef and related products, underpinned by a proud Australian heritage and outstanding operating capabilities.
The sale follows a year-long campaign by the Kidman company, founded in 1899, to secure a transaction considered in the best interests of shareholders and all Kidman stakeholders.
