Offering 30% Premium to Shareholders... UBS Selected as Advisor
"High Likelihood of Australian Government Approval... Acquisition Expected to Proceed Smoothly"
Hanwha Group has reportedly proposed AUD 1 billion (approximately KRW 880 billion) to acquire the Australian defense shipbuilding company Austal.
On the 1st (local time), Austal received an acquisition offer from Hanwha at AUD 2.825 per share, according to local media reports. This amount represents about a 30% premium over Austal's recent share price of AUD 2.20. Hanwha is said to have appointed investment bank UBS as its advisor for the acquisition.
Austal specializes in the design, construction, and support of defense and commercial vessels, producing naval ships, high-speed ferries, offshore wind farm vessels, and supply ships for oil and gas platforms. It operates shipbuilding facilities in Henderson, Western Australia, and Alabama, USA, and also builds commercial ships in the Philippines.
In November last year, Austal signed an initial contract with the Australian federal government for the Strategic Shipbuilding Agreement. If a binding contract is finalized between Austal and the Australian government, Austal plans to build and deliver 18 landing ships and large landing ships to the Australian military. Additionally, Austal has secured further contracts with the Australian Navy for two patrol boats, bringing the total number of vessels to be delivered in the future to 10.
Hanwha submitted its initial acquisition proposal six months ago, in October last year, but Austal has reportedly shown a slow response to the acquisition process, citing Australian security concerns.
Hanwha and Austal conducted business due diligence in March, but Austal reportedly unilaterally canceled the on-site inspection schedule. It is interpreted that Austal is considering separating its large-scale US operations to sell to private equity funds or relisting its US business, given the significant scale of its operations in the United States.
However, Hanwha is said to have confirmed through a global law firm that there are no issues regarding approvals from the US and Australian governments. In particular, given the friendly relations between the Australian and Korean governments and Hanwha's ongoing defense projects targeting Australia, such as the K9 self-propelled howitzer and Redback, the acquisition of Austal is expected to face no major obstacles.
Richard Marles, Australia's Deputy Prime Minister and Minister for Defence, also emphasized the importance of defense cooperation with Korea, stating, "Australia faces no greater task than deepening its strategic partnership with the Republic of Korea," and added, "As mature liberal democracies, I am confident that the strategic defense relationship between Australia and Korea can be strengthened and is full of opportunities to deepen further."
An industry insider said, "Looking at cases of overseas sales of Australian companies, only 0.2% of over 4,000 cases in the past three years were disapproved, and those were limited to hostile countries such as China," adding, "The likelihood of Hanwha's acquisition of Austal being approved is expected to be high."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
