The Federal Treasurer Scott Morrison has found the proposed sale of cattle station giant S. Kidman & Co to a Chinese-owned syndicate is not in the national interest.

Mr Morrison said that was his “preliminary view” of the proposal presented to the Foreign Investment Review Board, by the Dakang Australia Group, earlier this month.

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But, he has left the door open to approving the sale of S Kidman & Co after consideration of an external and independent review of the sale process.

While the review found the sale process followed a satisfactory commercial practice that offered opportunity to Australian parties to make an offer, it also found there was significant domestic interest in Kidman.

Kidman runs a number of “excellent” properties in Queensland’s Channel Country. Photo:AAP

“I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid,” Mr Morrison told reporters in Canberra on Friday.”

“The size of the asset makes it difficult for any single Australian group to acquire the entire operation.”

The decision comes after Mr Morrison rejected an initial bid by a related Chinese company, Penxing Group.

The consortium had revised the deal to exclude Kidman’s largest property, Anna Creek, in South Australia, which is located near the Woomera weapons testing range.

“Given the size and significance of the Kidman portfolio, I am concerned that the acquisition of an 80 per cent interest in S. Kidman and Co Limited by Dakang Austarlia Holdings may be contrary to the national interest,” Mr Morrison said.

Deputy Prime Minister and Nationals leader Barnaby Joyce previously said he “liked the idea” of Australian companies bidding for Kidman.

Mr Morrison today said there was still “significant domestic interest” in the company.

The decision is not an outright rejection and Dakang has until May 3 to respond.