Australia's government will not allow sale of the nation's largest cattle operation S. Kidman and Co. to a foreign buyer, saying it will be against the national interest.
The privately own company said in April it was looking to sell its cattle operations, which hold an average herd of 185,000 head of cattle, in an effort to raise cash for other businesses.
Rumours have been circulating through the local media that a bidding war has reached over 350 million Australian dollars (250.06 million U.S. dollars) between two Chinese companies, however the deal's brokers Ernst and Young have remained tight lipped.
Australia's Treasurer Scott Morrison said on Thursday that after taking advice from the Foreign Investment Review Board (FIRB), he would not be authorising the sale of the Kidman operation as it is currently proposed.
In March, Australia's government required all agricultural land valued over 15 million Australian dollars to be subject to regulatory approval by the FIRB and said a registry of foreign land ownership is to be set up.
The Kidman operation holds approximately 1.3 percent of Australia's total land area and 2.5 percent of Australia's agricultural land, a key requirement to be a specialist arid zone cattle producer.
However 50 percent of one of Kidman's pastoral leases, Anna Creek, is located within the Woomera Prohibited Area (WPA) weapons testing range in South Australia.
Morrison said given the size and significance of the Kidman operation, along with the national security issues associated with WPA testing range, the sale in its current form would be contrary to Australia's national interest.
"Australia welcomes foreign investment where it is consistent with our national interests," Morrison said in a statement.
S. Kidman and Co. managing director Greg Campbell told Xinhua that he was not sure of the next step but said there should be workable solutions to the government's concerns that were both commercially and politically acceptable.
Campbell said breaking up Kidman's aggregated portfolio would be sending the wrong message to potential buyers as future owners wouldn't be able to pursue maximum productivity, profitability and better tax incentives.
"The highest priced buyers were off shore and did value the fact that it was an aggregated portfolio of properties that had those benefits arising," Campbell said.
The "fair and equitable" sale of the operations was open to local bidders, Campbell said, however at the "pointy end" of the process, there weren't any domestic players at the higher priced end.
"Also, (offshore buyers) are benefited by way of the present Australian currency circumstances compared to domestic buyers," he said.
Ownership of Australia's farmland has entered the local political debate in recent years amid concerns foreign interests are purchasing properties to capitalize on growing demand for higher quality products in Asia.
However Australia's business council has said up to 1 trillion Australian dollars of foreign investment is needed by 2050 for Australia's agriculture industry to meet its full potential.
In 2013, former treasurer Joe Hockey rejected a 2.8- billion-Australian dollar takeover of grain handler GrainCorp by U.S. multinational Archer Daniels Midland on national interest and competition grounds.
