Hanwha Ocean has defended its bid to acquire shipbuilder Austal, describing media reports suggesting that the Australian government would block the bid over security concerns as “baseless”.

“There is no foundation of the claim that the Foreign Investment Review Board (FIRB) would reject Hanwha’s acquisition of the company,” said David Kim, executive vice president at Hanwha.

Hanwha said it was “respectful of the FIRB regulatory approval process” but is confident in its ability to obtain FIRB approval for the transaction.

“Hanwha has already obtained FIRB approval for prior investments in Australia and has a proven track record of investment in Australia’s defence industrial base, being the contracted supplier of infantry fighting vehicles, self-propelled howitzers and ammunition resupply vehicles with significant investment in a Geelong manufacturing facility that employs local workers.”

Hanwha said an Austal acquisition would “benefit numerous stakeholders, including governments, shareholders, employees and communities” and is planning to go through all the proper processes towards a successful sale.

Austal confirmed on Tuesday that it had received an unsolicited conditional and non-binding indicative proposal from the Hanwha Group at AUD 2.85 ($1.86) per share.

However, Austal said it was not satisfied that the current proposal would obtain the necessary mandatory regulatory approvals in Australia and the US to enable it to proceed.

But Austal added that it was “open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved”.

Austal has been in play as a potential acquisition target since the summer of 2023, when it emerged that several North American investment funds specialising in the defence industry were eyeing up the fast ferry specialist.

Investors are reportedly hoping to capitalise on the opportunities presented by the AUKUS defence pact between Australia, the US and the UK.

Under the pact, Australia will spend more than AUD 368bn over the next three decades to buy a fleet of eight nuclear-powered submarines.

Austal’s major shareholder is Fortescue Metals chairman Andrew Forrest, who holds a 19.6% stake through his private Tattarang investment vehicle.

John Rothwell, 80, Austal’s founder and chairman, is the second-largest shareholder with a stake of just over 9%, according to the company.

The company operates five shipyards in four countries, including in Alabama in the US, near Fremantle in Western Australia and in the Philippines and Vietnam.

If a takeover were to go ahead, it is unclear at this stage what would happen to Austal’s fast ferry construction business, which is dwarfed by its work in the defence sector.