Australian rivals challenge Rinehart bid for S. Kidman

The all-Australian syndicate, which also includes the Harris and Oldfield families, is understood to have been formed in June and denied access to the properties in order to make a bid.

Mrs Rinehart's Hancock Prospecting and Shanghai CRED launched a bid worth more than $365 million for the entire S.Kidman & Co business on Sunday with an arrangement that the company's largest station in the portfolio - Anna Creek Station - would then be automatically sold off with proceeds to be returned to Hancock and Shanghai. Anna Creek Station, next to the Woomera test range, was central in the first decision by the federal government to knock back Chinese bids for the company.

The controversial bidding process run by EY could still receive an alternative bid from the wealthy families syndicate, however there is a $3.8 million break fee between S.Kidman & Co and the Hancock joint venture if either decide to walk away.

S.Kidman & Co managing director Greg Campbell said he was unaware of the family syndicate challenge.

"I don't know where negotiations have got to with other parties," Mr Campbell said, "I am not at liberty to confirm the other bidders, their pricing or the execution risk involved," he said.

The Brinkworths, based in South Australia, were one of the first families to be interested in the Kidman holdings.

Mr Brinkworth said on Monday evening that he was "not in a position to comment" but that "time will work it all out".

Representatives from the family syndicate including Mr Buntine were unavailable or declined to comment on their possible alternative bid.

One industry participant who is familiar with the syndicate said the financial and political firepower of Mrs Rinehart would be hard to compete with and that it would be hard to overturn the agreement between S.Kidman & Co and the Hancock Shanghai CRED joint venture.

With Gina Rinehart's agreement to buy Kidman considered a done deal politically, attention will turn to what her strategy will be for building up the business.

The Adelaide-based S. Kidman & Co controls just over 10 million hectares of land and has a cattle carrying capacity of 185,000.

But the company has recorded several after-tax losses in the past few years the most recent being a $1.4 million for the 2013-14 financial year.

In that year Kidman was forced to sell down its herd, by around 15 per cent to 182,000 head, during the year.

The sales were forced because of a second summer of low to zero rainfall in the Queensland Channel Country and northern South Australia.

However conditions have now changed and values for both cattle and rural properties have climbed considerably.

Mrs Rinehart's strategy will be based around exports to China.

The original strategy of Sir Sidney Kidman is likely to be abandoned in favour of the new outward bound strategy.

By the time of his death in 1935 Kidman owned 68 stations over 260,000 square kilometres of land from the north to the south of Australia. The chain of properties to the south was in part to mitigate against climatic conditions but also as a way to get cattle into where the population was at that time.

But times have changed. The target population has shifted. It is no longer Melbourne and Sydney but Asia. So the strategy is reversed.

Mrs Rinehart is unlikely to bolt on contiguous properties but secure fattening properties close to ports such as Darwin and Townsville where live exports are growing.

What will keep the strategy viable is an arrangement with a major Chinese group such as Shanghai CRED who could wield some serious power in distributing beef from Australia's most iconic of cattle companies.

This story first appeared on The Australian Financial Review.