Austal Australia refers to media on Monday, April 1, and confirms it has received an unsolicited, conditional, and non-binding indicative proposal from South Korean shipbuilder Hanwha Ocean to acquire Austal by way of a scheme of arrangement.
Under the indicative proposal, Austal shareholders would receive AU$2.825 (US$1.84) cash per Austal share.
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.
Austal said it invests considerable time and resources into deciding whether it should grant a potential purchaser access to the company's otherwise confidential detailed financial records, forecasts, and contracts as part of a due diligence process.
In doing so, Austal assesses a range of factors, including but not limited to the potential for shareholder value creation, competition concerns, and a potential purchaser's ability to ultimately complete a transaction (which would include necessary government approvals). This latter consideration is particularly relevant in relation to the proposal from Hanwha, 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 November 23, 2023, that Austal and the Department of Defence (DOD) had executed a memorandum of understanding (MOU) to negotiate a Strategic Shipbuilding Agreement (SSA), under which Austal would be appointed as the government's strategic partner for vessels to be constructed at Henderson in Western Australia.
In announcing the MOU for the SSA, the DOD 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 US to enable it to proceed.
Austal said that, at present, it is not satisfied that these mandatory approvals would be secured, though the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.
Austal clarified that its shareholders are not required to do anything in relation to the indicative proposal.
