Austal receives unsolicited bid from Hanwha

2024-04-14T14:40:58+00:00 April 14th, 2024|Marketing|

Fast ferry and defence craft builder and designer, Austal, has confirmed it has received an unsolicited, conditional and non-binding indicative proposal from Hanwha Ocean to acquire the company.

Under the indicative proposal, Austal shareholders would receive $2.825 cash per Austal share.

Hanwha’s proposal is subject to numerous conditions, including due diligence, various regulatory approvals, including Australia’s Foreign Investment Review Board (FIRB), the US Committee on Foreign Investment and the US Defense Counterintelligence and Security Agency, final approval of the Hanwha Board, the unanimous recommendation of the Austal Board and Austal shareholder approval.

Austal has invested considerable time and resources into deciding whether it should grant a potential purchaser access to the company’s confidential detailed financial records, forecasts and contracts, as part of a due diligence process.

In doing so, it assessed a range of factors, including but not limited to the potential for shareholder value creation, competition concerns and a potential purchaser’s ability to ultimately complete a transaction (which would include necessary government approvals).

This latter consideration is particularly relevant in relation to the proposal from Hanwha, given Austal’s position as the designer and builder of defence vessels for the Australian and US navies and ownership clauses associated with defence contracts.

Austal also noted the announcement by the Australian Government on 23rd November, 2023 that the company and the Department of Defence had executed a Memorandum of Understanding (MoU) to negotiate a strategic shipbuilding agreement (SSA), under which Austal would be appointed as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.

The company’s Board, together with its advisers, has considered the proposal in detail and engaged with Hanwha in relation to whether the transaction as described would obtain the relevant regulatory approvals in Australia and the US to enable it to proceed.

At present Austal is not satisfied that these mandatory approvals would be secured, however the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.

At present, Austal shareholders are not required to do anything in relation to the proposal.