SYDNEY (Bloomberg) - A group of Outback scions has bid A$386 (S$409.5 million) for all the shares of S. Kidman & Co., trumping an offer from billionaire Gina Rinehart and her Chinese business partner for one of Australia's largest beef producers.
The group, known as BBHO - an acronym based on the family names of directors Tom Brinkworth, Sterling Buntine, Malcolm Harris and Viv Oldfield - would submit its proposal to the Kidman board on Sunday (Oct 23), an adviser for the group said.
If successful, the transaction will enable the BBHO families to more than treble the Kidman cattle operation to more than 500,000 head, the group said in an e-mailed statement. It's betting Kidman will prefer its all-Australian offer because it won't need approval from the Australian government.
Kidman, based in Adelaide, South Australia, is owned by descendants of its founder, "Cattle King" Sidney Kidman, who began in 1899 building a cattle empire spanning an area bigger than Indiana in central Australia.
"The four families comprising the consortium are deeply committed to honoring and preserving the Kidman heritage and brand, which will continue under the stewardship of highly regarded and successful Australian graziers," Mr Sterling Buntine, a spokesman for the group, said in the statement. "BBHO's financing is committed and our proposal does not require Foreign Investment Review Board approval, which means greater certainty for the Kidman shareholders."
Treasurer Scott Morrison last year blocked the sale of Kidman to an overseas buyer, saying the proximity of its Anna Creek property to a weapons-testing range could compromise national security.
Ms Rinehart, Australia's richest person, and Shanghai CRED Real Estate Stock Co. agreed to buy Kidman two weeks ago in a deal valued around A$365 million. That accord needs approval from the government because Shanghai CRED would own 33 per cent of the cattle company, and is conditional on the divestment of Anna Creek and a nearby ranch to other Australian grazing interests.
Mr Tad Watroba, executive director of Rinehart's Hancock Prospecting Pty, said on Sunday he was overseas and unable to comment immediately on the rival offer.
Born in 1857, Sidney Kidman was once the largest landholder in the world with an empire created by continually moving thousands of cattle across the arid Australian inland to where they would always find water, even in the severest drought, the Australian Broadcasting Corp. reported in 2003. Kidman, known as Sir Sidney after being knighted in 1921, owned more than 3 percent of Australia before his death in 1935.
Today, the Kidman beef interests span 18 so-called pastoral leases across remote South Australia, Western Australia, Queensland and the Northern Territory, totaling 101,000 sq km, or about 1.3 per cent of the country's land area.
The properties, including a feedlot near the wine-growing Barossa Valley in South Australia, carry about 185,000 cattle, producing mostly grass-fed beef for Japan, the US and South-east Asia, according to the company's website.
BBHO's offer, which is conditional on the group acquiring at least 90 percent of Kidman shares, is for the entire Kidman business, including the defense-sensitive Anna Creek ranch, which itself is larger than Israel. The group's members are already among Australia's most prominent cattle and sheep ranchers.
"As Australian grazing families, we share a strong affinity with the Kidman properties," Buntine said Sunday. "My father carted cattle for Kidman for many years, while several members of the Oldfield family earned their stripes as drovers on Sir Sidney's properties. More recently the Brinkworth family's epic 18,000-head cattle drive from central west Queensland to southern New South Wales followed in Sir Sidney's similar footsteps from earlier this century."
Kidman Protege Tom Brinkworth and his family run about 100 properties spanning more than 400,000ha, ABC reported in 2014. Brinkworth himself said he was inspired by the way in which Kidman strategically acquired land that enabled him to move cattle from remote northern Australia to markets in the south along inland river systems.
"I've admired what he did, and without really knowing it at the time, I was actually copying him," Mr Brinkworth said in a rare interview with the broadcaster's Landline program.
Buntine owns ranches east of Tennant Creek in the Northern Territory and at one point was in control of about 2.5 million hectares of cattle properties, ABC reported on Thursday.
Mr Viv Oldfield, an Alice Springs businessman and horse trainer, runs cattle on ranches in the Northern Territory and South Australia, and has partnered with a fellow pastoralist to sell cattle to China, the report said.
Mr Malcolm Harris and his family own ranches in the Northern Territory.
Ms Rinehart, the chairman of Perth-based Hancock Prospecting, amassed a US$12.1 billion fortune from mostly iron-ore mining and royalties from deposits discovered by her father Lang Hancock. In 2014, she bought a 50 per cent share in two ranches in Western Australia's West Kimberley region. She now has a beef herd of about 100,000 head, the Age newspaper reported in August.
Accounting firm Ernst & Young is advising Kidman on the sale process, which began in April 2015 following a decision by the current owners "to capitalise on the present demand for quality Australian agricultural assets", Managing Director Greg Campbell said at the time.
Agrify and Hindmarsh Partners are advising BBHO on the transaction.