Austal builds several military and commercial vessels, including Evolved Cape Class Patrol Boats for the Royal Australian Navy and Border Force. Photo: ADF.
South Korean industrial giant Hanwha Group has submitted an indicative offer to the board of Australian shipbuilder Austal to acquire the company through its Hanwha Ocean division.
The bid follows last month’s announcement that Austal will build additional Evolved Cape Class Patrol Boats and a follow-on class of small frigates for the Royal Australian Navy at its Henderson shipyard in Western Australia.
Austal is also building Guardian-class patrol boats for Australia’s Pacific island neighbours, and has a shipyard in the US state of Alabama where it builds Independence-class littoral combat ships and fast transports for the US Navy.
Last November, Austal and Australia’s Department of Defence signed an MoU to form a Strategic Shipbuilding Agreement (SSA) that would see Austal appointed as the Commonwealth’s strategic partner for vessels to be constructed in WA.
Hanwha says it brings important capabilities and investment to support Austal’s business and local Australian communities, while aligning with government objectives in Australia, the US and South Korea.
However, the bid will still need to pass scrutiny by Australia’s Foreign Investment Review Board (FIRB).
Hanwha executive vice-president David Kim says the company is confident in its ability to obtain approval of the sale, especially as it has now established an armoured vehicle production facility at Avalon Airport near Geelong for the Army’s AS9/AS10 Huntsman self-propelled howitzers and AS21 Redback infantry fighting vehicles.
“Hanwha has already obtained FIRB approval for prior investments in Australia and has a proven track record of investment in Australia’s defence industrial base, being the contracted supplier of infantry fighting vehicles, self-propelled howitzers and ammunition resupply vehicles with significant investment in a Geelong manufacturing facility that employs local workers,” he said.
The company says it is a “credible buyer with a highly competitive offer”. It says an acquisition of Austal would strengthen the growing alliance between South Korea and Australia, support the government’s priorities in the recently released independent analysis of the navy’s surface combatant fleet, and accelerate growth and innovation in Australian shipbuilding.
It believes an Austal acquisition would benefit numerous stakeholders, including governments, shareholders, employees and communities, and that it is planning to complete all the proper processes towards a successful sale.
Hanwha Ocean has built a wide variety of military and commercial ships and other vessels, including submarines, destroyers, frigates and other naval support vessels, LNG Carriers and very large crude carriers (VLCC).
Austal today (2 April) released a statement confirming the unsolicited, conditional and non-binding indicative proposal from Hanwha Ocean.
“Hanwha’s indicative proposal is subject to numerous conditions, including due diligence, various regulatory approvals including Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the United States (CFIUS) and the US Defense Counterintelligence and Security Agency, final approval of the Hanwha board, the unanimous recommendation of the Austal board and Austal shareholder approval,” the statement said.
“The Austal board, together with its advisers, has considered the indicative proposal in detail and engaged with Hanwha in relation to whether the transaction described in the indicative proposal would obtain the relevant regulatory approvals in Australia and the USA to enable it to proceed.
“At present Austal is not satisfied that these mandatory approvals would be secured, however, the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.”
