Hanwha Targets US Warships... Reinitiates Acquisition of Australian Shipbuilder Austal

Hanwha Aero and Hanwha Systems Participate in Capital Increase of Australian Subsidiary
Naval Ship Production in the U.S. as Well... Synergy Expected

Hanwha Group is reattempting to acquire Australian shipbuilder and supplier Austal through Hanwha Systems and Hanwha Aerospace. Previously, Hanwha Group proposed the acquisition of Austal through Hanwha Ocean but was rejected; this time, it is reported that they will attempt a public share purchase.

Littoral Combat Ship (LCS) manufactured by Austal (Photo by Austal website)

On the 18th, Hanwha Systems and Hanwha Aerospace announced that they invested 202.7 billion KRW and 64.2 billion KRW respectively into their local Australian subsidiary 'HAA No.1 PTY LTD' through a paid-in capital increase the day before. Both companies explained that the purpose of participating in the capital increase was to 'enter global markets including Australia.'

With this, the cumulative capital of 'HAA No.1 PTY LTD,' established this year, reaches approximately 337 billion KRW. However, the two companies did not provide specific public explanations.

According to industry sources, Hanwha Group is expected to use the funds accumulated in the local subsidiary to purchase shares of Austal, a shipbuilding company headquartered in Australia.

Previously, Hanwha Ocean proposed acquiring Austal for 1.02 billion Australian dollars (approximately 930 billion KRW) in April last year, but the deal fell through after Austal's management rejected the offer. Currently, Austal's market capitalization is 1.391 billion Australian dollars (approximately 1.28 trillion KRW), with Tata Rang Ventures holding a 19.61% stake as the largest shareholder. The funds Hanwha Group injected into 'HAA No.1 PTY LTD' are sufficient to purchase about 25% of Austal's shares.

Austal manufactures naval vessels, high-speed ferries, offshore wind power plant vessels, and oil and gas platform ships. It is a major defense contractor that designs, builds, and supplies ships not only to the Australian Navy but also to the U.S. Navy. Austal manufactures ships in both Australia and the United States. In the U.S., it operates naval-related projects at its Alabama shipyard.

Therefore, for a foreign company to acquire Austal, which has been designated as a strategic shipbuilding company by the Australian government, approvals must be obtained from the Australian Foreign Investment Review Board (FIRB), the U.S. Committee on Foreign Investment in the United States (CFIUS), and the U.S. Defense Counterintelligence and Security Agency. Analysts suggest that Hanwha Group's reattempt to acquire Austal, which participates in U.S. naval shipbuilding, aims to actively enter the U.S. shipbuilding market by creating synergy effects with Hanwha Ocean.

Previously, Hanwha Group secured a foothold in the North American shipbuilding and defense market by acquiring Philly Shipyard through Hanwha Ocean and Hanwha Systems. Amid strategic competition with China, former U.S. President Donald Trump expressed a strong intention to significantly increase the country's naval and commercial shipbuilding capabilities, leading to expectations that the U.S. shipbuilding market will expand.