Hanwha Group is seeking to acquire the U.S. business unit of Austal, an Australian shipbuilding and defense company, for up to 1.7 trillion won. The unit produces U.S. Navy vessels and nuclear-powered submarine modules, and if the acquisition succeeds, Hanwha's U.S. naval business is expected to pick up speed.
On the 11th, Hanwha Defense USA, the U.S. subsidiary of Hanwha Aerospace(012450), made a conditional offer to Austal to acquire Austal USA, its U.S. business unit. Hanwha proposed a price of $1.05 billion to $1.2 billion (about 1.49 trillion to 1.7 trillion won). Hanwha currently holds 19.9% equity in Austal's headquarters, and separately seeks to acquire 100% equity of the holding company related to Austal USA.
Austal USA builds vessels for the U.S. Navy and Coast Guard at its shipyard in Mobile, Alabama. It has about 3,500 employees and a backlog worth $10 billion (about 14.1 trillion won). In particular, Austal USA supplies submarine modules to General Dynamics Electric Boat. The modules produced by Austal USA are used to build the Navy's Virginia-class attack nuclear-powered submarines and Columbia-class strategic nuclear-powered submarines.
If Hanwha acquires Austal USA, it will secure core production capabilities in the U.S. Navy's nuclear submarine supply chain as well as a U.S. base for ship construction. Hanwha is expected to use this to expand simultaneously from commercial ships to warship construction in the United States. Coinciding with U.S. President Donald Trump's push for policies to revive the country's declining shipbuilding industry, this strategy could gain further momentum.
However, the transaction is still in its early stages. Hanwha proposed the deal conditional on due diligence, and Austal's board approved it. The due diligence is scheduled to run for four weeks from the day Austal provides the information Hanwha requested. For the acquisition to be completed, it must clear regulations, including approval from the Committee on Foreign Investment in the United States (CFIUS) and the Defense Counterintelligence and Security Agency (DCSA). Consultations are also required with the U.S. Department of War (Department of Defense), the U.S. Navy and Coast Guard, and the Australian Department of Defence.