Shipbuilder Hanwha Ocean has launched an unsolicited bid to take over Australian fast ferry and naval shipbuilder Austal.
The South Korean group’s non-binding indicative proposal is worth AUD 2.825 ($1.838) per Austal share, Austal said.
Austal’s shares closed at AUD 2.20 last week before the Easter holidays. Following the announcement of the offer, they are now trading at AUD 2.42.
However, any deal would be subject to numerous conditions, including due diligence and various regulatory approvals, Austal added.
These include the blessing of Australia’s Foreign Investment Review Board and US defence authorities. given Austal’s large newbuilding programme for the US Navy.
Austal said it invests “considerable time and resources” in deciding whether to grant a potential purchaser access to “confidential detailed financial records, forecasts and contracts as part of a due diligence process”.
“In doing so, it 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,” it added.
Austal said it has considered the proposal in detail and engaged with Hanwha to discuss whether the transaction would obtain regulatory approvals in Australia and the US to enable it to proceed.
“At present Austal is not satisfied that these mandatory approvals would be secured, however the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved,” it added.
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 through his private Tattarang investment vehicle.
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.
