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Homedeals and iposBattle for Kidman cattle empire sparks calls for change in Australia's foreign...

Battle for Kidman cattle empire sparks calls for change in Australia’s foreign investment laws

A fresh bidding war over Australia's biggest farm has reignited fears of anti-China sentiment and put pressure on Canberra to tidy up its foreign investment rules.

The Kidman cattle empire sits across four Australian states, is home to 10 ranches and accounts for 2.6 percent of the nation's total agricultural land. It is also one of the biggest beef producers in a country that's ranked among the world's largest exporters of the meat. The landholding has been on sale since June last year but the government has blocked offers from Chinese buyers on the back of national interest and security concerns.

The fragile 'Painted Hills', a rock formation in the South Australian desert near the Anna Creek Station, halfway between Adelaide and Alice Springs. The site, home to the world's largest cattle station, is also in the centre of the Australian Defence Department's Woomera weapons testing site, a testing field the size of England.Glenn Campbell | The Sydney Morning Herald | Fairfax Media | Getty Images

Now, two new bids are on the table: a 365 million Australian dollar ($278 million) offer from Australian Outback Beef (AOB) and a A$386 million proposal by a consortium of four Australian families known as the BBHO syndicate.

AOB is a joint-venture company majority owned by Hancock Prospecting, helmed by Gina Rinehart, Australia's richest woman, and one-third owned by Chinese developer Shanghai CRED. The BBHO group includes Australian land owners Tom Brinkworth, Malcolm Harris, Viv Oldfield and Sterling Buntine.

Sentiment seems to be leaning towards BBHO as its offer is higher and doesn't require Australian foreign investment approval or clearance from Chinese regulators, unlike the AOB deal. But should BBHO win, it could be painted as another example of an increasingly protectionist stance from Australia on foreign investment, particularly from China, sparking a possible backlash from a valued trade partner.

"If Australia is seen as being too protectionist and inconsistent in relation to foreign investment, we would be a less attractive destination," explained Vivienne Bath, professor of Chinese and international business law at the University of Sydney.

A sensitive topic

Canberra has long voiced its openness to foreign investment but a flood of Chinese funds, particularly into real estate, has created a popular impression with the public that Chinese companies were "buying up Australia," noted Bath.

And in recent months, the government has rejected a number of Chinese proposals for Australian state assets, citing national security and national interest issues.

Treasurer Scott Morrison blocked offers from State Grid Corp of China and Hong Kong's Cheung Kong Infrastructure in August to buy a controlling stake in Ausgrid, the country's biggest electricity network. The decision would "severely" reduce the appetite for Chinese companies to invest in Australia, China's Commerce Ministry warned at the time.

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