On Friday, the possibility of Pengxin of owning an 80 percent share of S. Kidman & Co., a company founded in 1899 that has 10 gigantic ranches spanning more than 38,000 square miles, roughly the size of Virginia, dimmed. The deal was reportedly worth about $280 million. Pengxin's initial offer for all of S. Kidman's ranches was rejected in November over "security concerns," as the largest of the ranches overlapped with a rocket firing range operated by the Australian military. That ranch was eliminated from the second bid, reducing the area for sale to about 30,000 square miles.
The land is almost all in Australia's Outback, an arid region with little vegetation. For that reason, S. Kidman's ranches have a relatively low cattle population for their size — about 185,000 on average.
Scott Morrison, Australia's treasurer, said blocking the sale was in the national interest. He expressed doubts that Australian companies had been given every opportunity to bid on the land but said the size of the sale may have been untenable for most of those companies in the first place. "There are not too many jurisdictions anywhere in the world where foreign acquisition of land — large holdings of this nature — would be permitted," he said, according to the Associated Press.
Australia's ABC news outlet reported that the decision is not an outright rejection and that Dakang has until Tuesday to respond.
Foreign ownership of agricultural land is a touchy subject in Australia and New Zealand. Some have voiced concerns that Chinese companies may give Chinese vendors preferential pricing, and public animus arose in Auckland, New Zealand's biggest city, after media leaked reports that buyers with Chinese surnames accounted for half the purchases of homes there worth more than $1 million (in New Zealand dollars).
Chinese companies are on track to break a record they set last year for purchasing foreign businesses. Agribusiness has been a major driver of that trend. The China National Chemical Corp. recently proposed a $43 billion takeover of Syngenta, for instance. The Pengxin deal looks like small change in comparison.