Global shipbuilder Austal Limited (ASX: ASB) – which is involved in building defence vessels for both the Australian and American navies – has received an indicative proposal for takeover by South Korea’s Hanwha Ocean Co Ltd.
The proposal was described as ‘unsolicited, conditional and non-binding’, and would entail Hanwha acquiring Austal through a scheme of arrangement, and Austal shareholders receiving $2.83 for each of their shares.
Given its status in relation to the Australian and US navies, Austal emphasised that government approvals would be one of the crucial conditions in relation to Hanwha’s bid.
These would need to be achieved from bodies such as Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the United States (CFIUS) and the US Counterintelligence and Security Agency.
Foregrounding this is the memorandum of understanding (MOU) achieved between Austal and the Australian Department of Defence last November to negotiate a Strategic Shipbuilding Agreement (SSA), which would involve the company becoming the Commonwealth’s strategic partner for vessels to be built in WA.
Due diligence, final approval by the Hanwha board, and unanimous support from its own board and shareholders would also be factors considered by the company.
The Commonwealth Department of Defence emphasised the government’s investment in Austal’s business, stating that “a sovereign and enduring naval shipbuilding and sustainment industry at Henderson is central to the Government’s commitment to ensuring continuous naval shipbuilding in Australia and delivering the capabilities needed to keep Australians safe.”
Hanwha is one of South Korea’s three major shipbuilders and was formerly known as Daewoo Shipbuilding & Marine Engineering Co Ltd.
Austal is trading at $2.2c.