The Kidman cattle empire will be re-offered for sale in its entirety after its preferred Chinese–Australian buyer on Tuesday withdrew its $371-million bid.

Federal Treasurer Scott Morrison all but ruled out the offer on Friday, when he said the 80 per cent stake it would deliver to Chinese company Dakang Australia Holdings may not be in the national interest.

He gave S Kidman and Co and the bidding consortium, which included local investment company Australian Rural Capital, until Tuesday to respond.

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S Kidman and Co managing director Greg Campbell said in a statement that “faced with such tight timelines, withdrawing the FIRB (Foreign Investment Review Board) application and terminating the [bid] was the only option available”.

He said Kidman family shareholders had shown “firm resistance” to seeing the 120-year-old company broken up, despite Mr Morrison’s comments on Friday.

“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 said.

But Mr Campbell said: “Kidman is typical of many large agricultural pastoral holdings in that the value of the business comes from the strategic advantage in having a geographically spread portfolio of properties.”

“The integrated cattle production system provides economies of scale, and flexibility in managing cattle movements between locations to maximise the use of feed resources, mitigate the impact of poor seasons and provide access to a range of end markets.

“A break up of the business to sell properties separately would result in significant reduction in Kidman’s value, reduced production of up to 3,000 tonnes of beef per annum, the loss of 50 jobs from the present structure, and lower tax revenue for the country.”

What level of foreign investment is acceptable?

The mainly family-owned Kidman company is Australia’s largest private landholder, controlling 1.3 per cent of Australia landmass and 2.5 per cent of its agricultural land.

It runs 185,000 cattle on pastoral leases covering 101,000 square kilometres of Queensland, South Australia, Western Australia and the Northern Territory.

Mr Campbell said the Kidman board would continue its discussions with the preferred bidders to address some of the concerns raised by the Treasurer.

He said Kidman would also be seeking some clarity from the Federal Government around the level of foreign investment that was deemed acceptable.

S Kidman & Co is currently 34 per cent foreign-owned.

“Over 130 Australian parties were approached as part of the initial sale process that commenced in April 2015, with late-stage Australian parties also given the opportunity to acquire the business through the opening up of a secondary process in March 2016,” Mr Campbell said.

“It is important to note that no final bids were received from Australian parties at any time during the extensive and lengthy sale process.”

He said Australian parties, as well as those from anywhere around the world, remained welcome to bid for the cattle empire in its entirety.

– ABC