SOUTH Korean shipbuilder Hanwha Ocean’s bid for Western Australia-based Austal Shipping, appears to be dead in the water.
Hanwha had made an unsolicited bid for Austal of around $1.02 billion but told regulators at the end of September it had abandoned those plans.
Austal had already rejected the bid on the basis that it would be too difficult to achieve mandatory regulatory approvals in the US and Australia.
An Austal media release on 2 April said the Hanwha indicative proposal was 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 media release highlighted the government approvals aspect which it claimed was particularly relevant given Austal’s position as the designer and builder of defence vessels for the Australian and US navies and ownership clauses associated with defence contracts.
“Austal also notes the announcement by the Australian Government on 23 November 2023 that Austal and the Department of Defence had executed a Memorandum of Understanding (MoU) to negotiate a Strategic Shipbuilding Agreement (SSA), under which Austal would be appointed as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.
“In announcing the MoU for the SSA, the Commonwealth Department of Defence noted that ‘a sovereign and enduring naval shipbuilding and sustainment industry at Henderson is central to the Government’s commitment to ensuring continuous naval shipbuilding in Australia and delivering the capabilities needed to keep Australians safe’.
“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.”
At that stage the company was open to further engagement with Hanwha, but the South Korean company has since announced it was unable to reach a reasonable agreement with Austal.
