Hanwha Group Calls Regulatory Concerns for Austal Acquisition “Baseless”

 

South Korea’s Hanwha Group responded to the reports that its proposed acquisition of Australian-based shipbuilder Austal would not get regulatory approval calling the assertion “baseless,” while saying it plans to “go through all the proper processes toward a successful sale.” The response came shortly after Austal said it was not proceeding with the discussions because its board was not satisfied the approvals would be obtained.

Speaking with the media in South Korea, Hanwha Group cited its current work and recent approvals in Australia as well as its reputation in the United States, both countries which would have to approve an acquisition of Austal. Hanwha asserted that it is a known entity and respected ally to both Australia and U.S. defense leaders. Hanwha’s acquisition of Austal they said would build on alliances and a series of relationships between key defense and security partners.

“There is no foundation of the claim that the Foreign Investment Review Board (Australia) would reject Hanwha's acquisition of the company," said David Kim, Executive Vice President at Hanwha. "Hanwha has already obtained FIRB approval for prior investments in Australia and has a proven track record of investment in Australia's defense industrial base, being the contracted supplier of infantry fighting vehicles, self-propelled howitzers, and ammunition resupply vehicles with significant investment in a Geelong manufacturing facility that employs local workers."

Hanwha told the Korean media that it still believes “the possibility of acquisition is sufficient," according to the news agency Yonhap. Hanwha is saying it plans to proceed with the process calling for a due diligence process for Austal.

Austal’s board confirmed Tuesday morning Australia time that it had received an “unsolicited conditional and non-binding indicative proposal,” from Hanwha Group to acquire Austal. They said the offer was A$2.85 per share (US$1.86) and while the share price jumped more than 10 percent to close at A$2.43, it showed investors’ skepticism by not nearing the offer price. Australian media is also speculating that private equity investors might emerge as rival bidders.
    
“Hanwha brings important capabilities and investment to support Austal's business and local Australian communities while aligning with government objectives in Australia, the U.S., and South Korea,” Hanwha contends. They are saying the combination would also support the Australian government’s priorities for its surface fleet. 

Hanwha is calling itself “a credible buyer with a highly competitive offer.”

The board of Austal said it was open to further discussions with Hanwha if the company can “provide certainty” on whether a transaction would be approved.