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South Korean industrial powerhouse Hanwha Group has officially submitted an indicative offer to acquire West Australia-based naval and commercial shipbuilder Austal and its global business.
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Importantly, the deal would only proceed subject to the appropriate due diligence and Foreign Investment Review Board (FIRB) approvals empowering Austal to leverage the experience, skills, and business opportunities associated with being linked to a global business like Hanwha Group.
David Kim, executive vice-president at Hanwha, stressed that the company is respectful of the FIRB regulatory approval process but is confident in its ability to obtain FIRB approval for the transaction, saying, “There is no foundation of the claim that the Foreign Investment Review Board (FIRB) would reject Hanwha’s acquisition of the company.”
Hanwha stated that a recent media report, which states concerns that the Australian government would not grant permission of the sale of Austal because it carries out defence contracting work for the Australian government, is baseless.
The South Korean powerhouse already has a sizeable presence in Australia and would bring a range of advantages to the shipbuilder while Hanwha believes that the rationale and proposal presented to be “highly competitive” and in line with the Australian government’s broader strategy to develop Australia’s defence industrial base and supporting workforce.
These factors include:
- Enhancing and strengthening the Australia–South Korea alliance: Hanwha is a known entity and respected ally to both Australia and US defence leaders with a strategic presence in the Indo-Pacific. Hanwha’s acquisition of Austal would build upon the countries’ alliances and support Australia’s national security as a partner and ally, building upon a series of relationships between key defence and security partners.
- Supporting government priorities: The deal is aligned with Australian government objectives outlined in the Independent Analysis of Navy’s Surface Combatant Fleet, where Hanwha’s capabilities and investment would accelerate delivery of critical programs and allow Australia to keep sovereign shipbuilding capabilities in Henderson, Western Australia.
- Austal Value: Hanwha has more than 50 years of experience in shipbuilding, which would expand Austal’s growth potential and accelerate innovation (e.g. steel shipbuilding, production automation, smart shipyards, autonomous technology) while unlocking Austal value with increased investment and efficiencies.
- Building long-term partnerships: Hanwha is a long-term partner with the intent to invest in the business along with the workforce and communities it supports, while bringing stability to the company with long-term partnership at the forefront of decision making. With a focus on local jobs, community partnerships and economic development, Hanwha is an ideal partner for stable long-term growth compared to other ownership models.
“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,” Kim explained.
Hanwha believes 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.
More to come.
