Hanwha Ocean has dropped its bid to buy shipbuilder Austal.
In a regulatory filing, Hanwha Ocean said it has “decided to stop negotiations with Austal’s management and board of directors” and has notified the other party of its decision.
“We were unable to reach a reasonable agreement with its management and board of directors,” Hanwha Ocean said.
However, some reports indicated that Austal rejected Hanwha Ocean’s takeover bid due to regulatory challenges.
One of the three major shipbuilders in South Korea, Hanwha Ocean had made an offer for Austal at about AUD1.02bn ($701.7m).
It was keen to take over Austal as it formed part of the shipyard’s strategy to secure contracts for warships and maintenance, repair and overhaul services in broader markets, including the US.
The Okpo-based shipyard said an Austal acquisition would “benefit numerous stakeholders, including governments, shareholders, employees and communities”.
Headquartered in Australia, Austal’s main source of income is from its US affiliate, which participates in US defence programmes despite foreign ownership.
Austal’s major shareholder is Fortescue Metals chairman Andrew Forrest through his private Tattarang investment vehicle.
The shipbuilding group operates five shipyards in four countries, including in Alabama in the US, near Fremantle in Western Australia and in the Philippines and Vietnam.
Hanwha Ocean was formerly known as Daewoo Shipbuilding & Marine Engineering.
In June, Hanwha Ocean and Hanwha Systems acquired Philly Shipyard, a leading US shipbuilder that has delivered about half of all large oceangoing Jones Act commercial ships since 2000 for $100m.
Hanwha Ocean and Hanwha Systems envisage the acquisition as part of a long-term investment strategy to expand their global defence and shipbuilding activities and to bring best practices and leading technologies to complement existing Philly Shipyard capabilities.
