Australia really doesn't want the Chinese to own a big chunk of its land.
In the latest chapter in a protracted back-and-forth over the sale of Australian company S. Kidman & Co., Australia's treasurer said Friday that he is poised to block a Chinese consortium's bid to buy the agricultural giant.
Scott Morrison told Dakang Australia Holdings, which is led by Shanghai Pengxin Group, that he is concerned with the "size and significance" of the $285 million purchase of what equates to 1% of Australia's landmass. Because Kidman is being sold as a "single aggregated asset," it's difficult for Australia bidders to compete for the company, Morrison said, according to the Financial Times.
Kidman, a family-owned business, was founded in 1899 by so-called cattle king Sidney Kidman. It controls more than 11 million hectares of pastoral leases and owns about 185,000 cattle.
The preliminary decision by Morrison to reject the deal is the second time he's snuffed out a Chinese bid for Kidman.
In the first instance, four separate groups linked to Chinese-based investors had been vying for all of the Kidman property—2.5% of Australia’s total farming land that was roughly the size of Kentucky.
Morrison put the kibosh on that sale because a large part of the land was within the Woomera Prohibited Area, a weapons testing site in the state of South Australia.
In its most recent proposed deal, Kidman carved out the land near the testing site in an effort to address regulators' concerns. But even that didn't convince Morrison.
The proposed sales of Kidman have become a test case for how Australia balances worries about foreign ownership with its need for foreign investment. China’s appetite for industrial commodities resulted in a 20-year boom in Australia, making it one of its Australia’s biggest trading partners. Yet there are concerns in Australia about China's human rights and governance record, as well as the lack of reciprocal rights for Australian investors in China.
China has run into similar blowback in other countries where it's tried to invest. Last year New Zealand blocked the sale of a giant sheep- and cattle-station to Shanghai Pengxin, one of the disappointed bidders for Kidman’s leases.