Kidman sale likely to go ahead

Chinese conglomerate Shanghai Pengxin Group is understood to have edged out other rival bidders including firms from China and Hong Kong, as well as a Canadian teachers' pension fund. The sale, believed to be around $300 million, could be announced next week, sources close to the deal said.

The revised deal sees the world's largest cattle farm, the 24,000 square kilometre Anna Creek, carved out from the sale in an effort to appease Treasurer Scott Morrison. The price reflects a $50 million valuation of Anna Creek.

The Treasurer blocked the original deal over concerns of Anna Creek's proximity to a weapons testing range in the Woomera Prohibited Area. Foreign bidders have also secured Australian partners as a condition of the bid.

The carve-out is understood to have satisfied Foreign Investment Review Board concerns, but the deal remains subject to final government approval.

Kidman's assets are 10 cattle stations straddling three states, altogether occupying 2.5 per cent of Australian agricultural land. Even excluding Anna Creek, the land changing hands is around the size of the Czech Republic, or more than double that of Belgium.

The sheer geographic scale of the asset, and sensitivity toward Chinese investment, has seen the deal emerge as a major foreign investment test for the government.

Pengxin, a frontrunner in November along with several competing Chinese bids, was understood to have questioned the national security grounds raised by the Turnbull government, given it was flagged late in the process.

Chinese bidders believed it had more to do with a backlash following the Port of Darwin revelations.

"Everyone was conscious of the FIRB risk at the inception but up to very late in the process the impression … was that it's a manageable risk," one source said.

"Towards the end it became apparent that view was probably wrong and the Woomera issue was elevated. This is after the Port of Darwin entered into the picture. Therefore it proves that [the] FIRB process is not independent and it's very political."

The federal government is tightening rules around the foreign ownership of what it considers critical infrastructure owned by the states, following damaging revelations late last year that the Port of Darwin had agreed a long-term lease with a Chinese company with purported military ties.

The move could potentially scupper Victorian state government plans to cash in on the privatisation of the Port of Melbourne - with cashed-up Chinese bidders also understood to be circling.

Kidman bidders made offers to carve out Anna Creek, or parts of it, at the time of the previous application, but it became clear the deal was dead in the water.

Kidman chief executive Greg Campbell said he would not be drawn into details of the bidders, and said the enterprise was in a "holding pattern" until the government announced its decision.

"We have gone as far as we can go practically, and that's by Anna Creek, a quarter of the area, not being sold, and Australians being part of the bid syndicates. There is a notional reduction of land area held by foreigners because of Australian content being part of the ownership," Mr Campbell said.