Austal, the Australian shipbuilder, finds itself at a crossroads as it contemplates an unsolicited bid from South Korean conglomerate Hanwha worth A$1.02 billion ($662 million). While confirming the receipt of the bid following media reports, Austal expressed reservations regarding the approval process, particularly concerning its critical role as a partner to the Australian and US navies.
The company’s apprehension stems from its recent commitment to a Strategic Shipbuilding Agreement with the Australian Department of Defence, emphasizing the importance of keeping naval shipbuilding within the country. This memorandum of understanding (MOU) underscores Austal’s pivotal position as a national asset in Australia’s defense infrastructure.
In response to Hanwha’s bid, the South Korean entity asserted that Austal’s sale should be restricted to companies within the AUKUS alliance countries (US-UK-Australia). Hanwha justified its eligibility based on South Korea’s close military cooperation ties with both the US and Australia, citing numerous joint exercises as evidence of its strategic alignment.
Despite the initial rejection of Hanwha’s bid by Austal’s board, the company remains open to further engagement if Hanwha can provide stronger assurances regarding regulatory approvals. David Kim, executive vice president at Hanwha, expressed confidence in gaining approval, countering concerns by highlighting Hanwha’s successful track record of investment in Australia’s defense industrial base.
Kim pointed to Hanwha’s prior approvals from the Foreign Investment Review Board (FIRB) for investments in Australia, underscoring its commitment to the country’s defense sector. However, regulatory filings revealed that ongoing discussions between Hanwha and Austal’s management were currently stalled, despite Hanwha’s efforts to engage further.
Source: Global Data
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