Austal Limited has confirmed the reception of an unsolicited, conditional, and non-binding indicative proposal from Hanwha Ocean Co, Ltd (Hanwha) to acquire Austal through a scheme of arrangement.
Under the terms of the indicative proposal, Austal shareholders would stand to receive $2.825 cash per Austal share, the company said in an ASX announcement.
However, Hanwha’s proposal is contingent upon several conditions, including due diligence, regulatory approvals from entities such as Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the United States (CFIUS), and the US Defense Counterintelligence and Security Agency.
Additionally, final approval from the Hanwha Board, unanimous recommendation from the Austal Board, and Austal shareholder approval are required.
Austal emphasised the significant deliberation involved in granting a potential purchaser access to confidential financial records, forecasts, and contracts during the due diligence process.
Factors considered include the potential for shareholder value creation, competition concerns, and the purchaser’s ability to secure necessary government approvals, particularly given Austal’s role as a designer and builder of defence vessels for the Australian and US navies.
Furthermore, Austal noted the memorandum of understanding (MoU) executed with the Australian Department of Defence on 23 November 2023, regarding a Strategic Shipbuilding Agreement (SSA) aimed at appointing Austal as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.
The MoU underscores the government’s commitment to maintaining a sovereign naval shipbuilding and sustainment industry.
According to the company, the Austal Board, along with its advisers, has thoroughly assessed the Indicative Proposal and engaged with Hanwha to determine the likelihood of obtaining regulatory approvals in Australia and the USA.
Currently, Austal is not convinced that the requisite approvals will be obtained, but remains open to further engagement if Hanwha can provide certainty regarding approval.
