South Korean firm drops planned takeover of Australian naval shipbuilder
South Korean shipbuilder Hanwha Ocean has decided to abandon its plans to acquire Australian counterpart Austal, Hanwha Ocean confirmed via a regulatory filing earlier this week.
Hanwha Ocean said it has terminated its negotiations with Austal's management and board of directors and that the latter has already been notified of the decision.
The South Korean company said it was "unable to reach a reasonable agreement" with Austal's management and board of directors in relation to the planned purchase, which had a value of approximately AU$1.02 billion (US$700 million).
Austal, which manufactures vessels for naval as well as commercial customers, had earlier rejected the bid, confirming its position on the deal in an April 2, 2024 press release.
Austal earlier said that it received "an unsolicited, conditional, and non-binding indicative proposal" from 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," the company said in the April 2 release.
Austal concluded that it is "not satisfied" that the mandatory relevant regulatory approvals in Australia and the US would be secured to enable the acquisition to proceed.
Hanwha Ocean's parent company the Hanwha Group had dismissed Austal's statements as "baseless," saying that there is "no foundation of the claim" that the FIRB would reject the acquisition.
Hanwha added that it has "already obtained FIRB approval" for prior investments in Australia and has "a proven track record of investment in Australia's defence industrial base," having been awarded contracts for the supply of defence materiel such as armoured fighting vehicles and self-propelled artillery pieces to the Australian military.
