Impact of 'Australia Escort Ship Contractor Selection' Variable
Hanwha's bid to acquire the Australian shipbuilding and defense company Austal is expected to be postponed until after next year.
Although the Australian government has expressed a positive stance toward Hanwha's acquisition, it is anticipated that the timing of the acquisition will be delayed due to the ongoing selection process for the designer of the Australian government's frigate project.
According to industry sources on the 10th, the Australian government plans to order 11 frigates to replace its aging fleet amid the expanding influence of the Chinese navy in the Pacific region.
Earlier this year, the final candidates for the design contractor included Hanwha Ocean's 'FFX Batch II and III,' Germany's ThyssenKrupp Marine Systems (TKMS) 'Meko A-200,' Japan's Mitsubishi Heavy Industries 'Mogami 30FFM,' and Spain's Navantia 'ALFA 3000.'
The Australian side has stipulated that out of the 11 frigates, 3 will be built overseas, and the remaining 8 will be constructed at Austal's Henderson shipyard in southern Perth, Australia. If Hanwha acquires Austal before the contractor selection, competing shipbuilders may be reluctant to share intellectual property or core technologies with Hanwha, a rival, which could affect the selection process.
For this reason, it is expected that the frigate design contractor will be selected by the end of this year, followed by the approval process for Hanwha's acquisition of Austal. The acquisition is likely to become visible only after next year.
Recently, the possibility of Hanwha Ocean acquiring Austal has increased. When Hanwha proposed an acquisition price of 1 billion Australian dollars, approximately 890 billion Korean won, to Austal last month, the likelihood of approval from the Australian government was low.
However, the atmosphere in Australia has recently shifted. As the South Korean government has been discussing the possibility of joining AUKUS (the security alliance between the United States, United Kingdom, and Australia) with the Australian government, the Australian government has shown a positive attitude.
Richard Marles, Australia's Deputy Prime Minister and Minister of Defence, after meeting with South Korean Minister of National Defense Shin Won-sik earlier this month, stated, "(The merger of the two companies) is Austal's issue, and Austal is a private company," adding, "From the government's perspective, there is no concern about Hanwha moving in this direction," suggesting the possibility of approving Hanwha's acquisition.
However, local media have noted that Australia and Japan have been strengthening their military ties by enhancing joint military exercises and signing mutual access agreements for defense personnel, placing more weight on the possibility of a Japanese company being selected.
Austal specializes in the design and construction of defense and commercial vessels. It produces naval ships, high-speed ferries, offshore wind farm vessels, and supply ships for oil and gas platforms. It also owns a shipyard in Alabama, USA, where it develops command deck modules and ships for the US Navy's nuclear submarine fleet.
For Hanwha Ocean to build US Navy warships, acquiring Austal, which has a subsidiary in the United States, is essential. Under the Jones Act, commercial vessels operating in the US, whether coastal or inland, must be built in the US, owned by Americans, and operated by Americans.
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