Scott Morrison has blocked the sale of Australia’s largest private landowner to foreign investors, an acquisition that was valued at more than $350m.
The treasurer said the acquisition of S Kidman and Co Limited, which holds about 1.3% of Australia’s total land area and 2.5% of its agricultural land, would be against the national interest and he would not authorise the sale to proceed as proposed.
The decision – which followed advice from the Foreign Investment Review Board (FIRB) – could pave the way for some of the company’s holdings to be offered for sale in a different form.
Kidman described the decision as a surprise and began reviewing its options for a revised sale. The prime minister, Malcolm Turnbull, played down the potential for a backlash from Beijing given the high level of interest in the sale from Chinese bidders.
The government said Kidman’s 10 cattle stations included properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411 sq km and managing a long-term average herd of 185,000 cattle.
Morrison said about half of the Anna Creek pastoral lease was in South Australia’s Woomera prohibited area (WPA), a military weapons testing range. It was “not unusual for governments to restrict access to sensitive areas on national security grounds”.
“Given the size and significance of the total portfolio of Kidman properties along with the national security issues around access to the WPA, I have determined, after taking advice from FIRB, that it would be contrary to Australia’s national interest for a foreign person to acquire S Kidman and Co in its current form,” he said.
“I note that following communication of my decision all bidders to acquire S Kidman and Co Limited have elected to withdraw their FIRB applications prior to my final order being formalised.”
The bidding process has reportedly been dominated by Chinese companies. Shanghai Pengxin was said to have offered about $350m, but was facing competition from other bidders including the Hong-Kong based investment firm Genius Link Asset Management.
Before Morrison’s decision was announced, Genius Link Group’s founder, Joel Chang, told the Australian Financial Review there was “$1bn that we want to deploy in Australia over the next three years”.
Morrison said it was a matter for the seller “to consider how they wish to proceed with offering the composite interests of S Kidman and Co Limited for sale” and he would consider any future proposals on their merits.
The Kidman managing director, Greg Campbell, said the the company would now talk to the government and assess its options.
“We did think on balance these applications would pass scrutiny,” he told Guardian Australia. “We were at the fairly final stages of negotiations with a very short list [of bidders] who were at the higher price end of things and a big hold-up in proceeding through finalising sale was achieving these approvals. It was a surprise this morning but it’s just another roadblock we’ll have to work through.”
Campbell confirmed all of the final bidders were offshore entities because the Australian domestic buyers “fell away in price” in the later stages of the process.
Some of the offshore parties had been talking to Australian entities about potential joint investment, and those discussions might now have to be brought forward, the managing director said.
Turnbull indicated he was not anticipating a backlash from the Chinese government.
“You would be wrong to assume that there was only one foreign country associated with buyers, so there’s no issue of discrimination here, but plainly the Woomera prohibited area is called the prohibited area for a reason,” the prime minister told reporters on the sidelines of the Apec conference in Manila.
“I think what Scott has said in his statement, which I’m sure the owners will read carefully, is that there’s nothing to stop them to recalibrate or restructure the way in which they’re selling these assets and resubmit, so no doubt they will reflect on that.”
The Labor leader, Bill Shorten, said while he held concerns about the proposed sale, the government should be careful about the message it sent to foreign investors.
“Personally I had my concerns, it’s a big issue, but that’s why we have a Foreign Investment Review Board process,” Shorten said.
The federal Coalition government has repeatedly declared that Australian is “open for business” but foreign ownership of agricultural land is particularly contentious within the Nationals.
The deputy leader of the Nationals and agriculture minister, Barnaby Joyce, said he agreed with Morrison’s decision.
The leader of the Nationals, Warren Truss, has previously said it “would be disappointing if there are no Australian buyers and such an historic chain of properties were to fall into foreign ownership”.
Morrison said Australia welcomed foreign investment “where it is consistent with our national interests”.
