Hanwha Offers to Buy Austal USA

The U.S. division of South Korean shipbuilding giant Hanwha has made a non-binding offer to buy Austal USA, the American operations of Australian shipbuilder Austal Ltd. If accepted, the bid would achieve most of Hanwha's previous, unsuccessful effort to acquire the entire Australian parent company. The new bid for Austal USA is in the range of US$1.0-1.2 billion, according to an Australian stock market filing posted by Austal Ltd. - a marked improvement over its last reported offer for all of Austal's global holdings.

"Hanwha has made it a priority to significantly contribute to revitalizing American shipbuilding and is exploring a range of options to expand our footprint in the United States," said Hanwha Defense USA spokesman James Hewitt. "Any deal will be contingent on due diligence that permits a thorough evaluation of Austal USA’s operations and financials."

Austal USA is a large and growing defense shipbuilding enterprise based in Mobile, Alabama. It has expanded rapidly through the addition of multiple U.S. Navy contracts and subcontracts, including a new line of business in building modules for nuclear submarines. In 2024, it joined hands with the U.S. Navy, private equity firm CapZone and General Dynamics Electric Boat to effectively acquire and use the land of neighboring Alabama Shipyard for submarine module construction.

During the same period in 2024, Hanwha Ocean was in active conversations with Austal Ltd.'s management about the possibility of buying the firm and taking it private. As early as April 2024, rumors swirled of a proposed offer of about US$700 million for the entire business. Hanwha announced in September 2024 that it was giving up these conversations. The Australian Financial Review reported that Hanwha objected to a US$5 million discretionary termination fee that Austal Ltd. demanded in advance of due diligence reviews, and that the talks fell apart on the question of whether this fee was reasonable.

Hanwha has a demonstrated interest in the U.S. defense market. It has acquired Aker Philly Shipyard (now Hanwha Philly), won a newbuild order from the Missile Defense Administration, and secured repair work from U.S. Military Sealift Command. The addition of Austal USA would radically expand its American operations with more than 3,000 new employees, a modern 180-acre shipyard campus in Mobile, and a ship repair facility in San Diego - if its bid is accepted.

Austal USA is well placed for expansion, but has had difficulty in turning a profit on its recent contracts with the U.S. Navy. Its first deliveries from its new steel-hull construction line have generally been in the red, and it has not found success in convincing the Pentagon to provide contractual relief for unexpected expenses on those programs. In its latest filing, the company said that its U.S. division posted an EBIT loss of about US$125 million in FY2026.