Korea’s Hanwha Ocean Withdraws Takeover Bid For Australian Shipbuilder Austal

Hanwha Ocean, a South Korean shipbuilder, has officially withdrawn its bid to acquire Australian defense shipbuilder Austal.

The decision ended a year-long negotiation process that began in September 2023. The goal was to increase Hanwha’s global shipbuilding impact after its acquisition of the former Daewoo Shipbuilding and Engineering (DSME) shipyard.

In a letter to Austal, Hanwha CEO Hyek Woong Kwon criticized the firm for canceling planned operational visits without prior notice. He was frustrated by Austal’s demand for a USD $5 million termination fee, which would have been due if Austal had stated that regulatory approval was unlikely.

Austal, well-known for constructing ships for the Australian and United States navies, is strictly regulated when it comes to ownership changes.

An Austal representative defended the company’s actions, stating that when it informed shareholders in April that it had received an indicative, conditional offer from Hanwha, it was clear that the board and advisors were not sure that the required approvals for the deal could be obtained.

In April, Austal stated that Hanwha’s plan was subject to several conditions, including due diligence and regulatory approvals from Australian and U.S. authorities.

Austal also announced its recently signed Memorandum of Understanding with the Australian Department of Defense to negotiate a Strategic Shipbuilding Agreement.

Finally, Austal’s board concluded that it could not guarantee the mandatory approvals required for Hanwha’s proposal, but it remained open to discussions about whether Hanwha could get regulatory compliance.

Hanwha Ocean confirmed in a regulatory statement earlier this week that it had stopped negotiations with Austal’s management and board.

The company stated that it was “unable to reach a reasonable agreement” on the acquisition, which was valued at around AU$1.02 billion (US$700 million).

Austal revealed in a press release issued on April 2 that it had rejected Hanwha Ocean’s unsolicited bid, which included an offer of AU$2.825 (US$1.84) per share for its shareholders.

The proposal was subject to various conditions, including due diligence and approvals from Australia’s Foreign Investment Review Board (FIRB) and the United States Committee on Foreign Investment (CFIUS).

In response to Austal’s claims, Hanwha’s parent company, Hanwha Group, termed them “baseless” and stated that there was no evidence to show that the FIRB would reject the acquisition.

The company stated that it had already received FIRB permission for earlier investments in Australia and had a strong track record in the Australian defense sector, having secured contracts for a variety of defense assets.

Reference: Korea Times

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