Hanwha Ocean fails to acquire Australian shipbuilder Austal

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Hanwha Ocean fails to acquire Australian shipbuilder Austal

Published: 25 Sep. 2024, 18:46

Hanwha Ocean's shipbuilding site in Geoje, South Gyeongsang. [YONHAP]

Major Korean shipbuilder Hanwha Ocean said Wednesday its talks to acquire Australian shipbuilder Austal had fallen through, following a regulatory concern raised in Australia.

"We have decided to stop negotiations with Austal's management and board of directors as of today. We have also notified the other party of the decision," Hanwha said in a regulatory filing.

"We were unable to reach a reasonable agreement with its management and board of directors," it added.

Hanwha Ocean, formerly known as Daewoo Shipbuilding & Marine Engineering, reportedly made a potential acquisition offer late last year, with multiple media outlets suggesting the proposal was valued at around 1.02 billion Australian dollars ($701.7 million).

The acquisition was believed to be part of Hanwha's strategy to secure contracts for warships and maintenance, repair and overhaul services in broader markets, including the United States.

However, some reports indicated Austal rejected Hanwha's takeover bid due to regulatory challenges.

Headquartered in Australia, Austal generates a significant portion of its revenue from its U.S. affiliate, which operates under a special security arrangement allowing it to participate in sensitive U.S. defense programs despite foreign ownership.

Any potential sale of Austal to a foreign firm would have required approval from Australia's Foreign Investment Review Board and the Committee on Foreign Investment in the United States, among others.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]