A South Korean shipbuilder this week purchased a stake in the Australian company that owns one of the major U.S. naval shipyards.
Hanwha purchased a 9.9 percent stake in Austal, which owns the Austal USA yard in Mobile, Ala., that builds the Navy’s Littoral Combat Ships, Expeditionary Fast Transports, new T-AGOS(X) ocean surveillance ships and modular components for submarines.
“Hanwha intends to make a meaningful contribution to Austal and Australia’s defence industry through bringing its extensive manufacturing and operational experience to maximize the opportunities in front of the company,” Hanwha said in a company news release.
In addition to the shares purchased on the open market, the South Korean shipbuilder is also trying to buy another 9.9 percent stake through a total return swap, according to the news release. Hanwha would need approval from Australian regulatory authorities to purchase 10 percent or more of the company.
“Hanwha has today applied for Australian Foreign Investment Review Board (FIRB) approval to increase its shareholding in Austal to 19.9%,” the company release reads.
Hanwha’s purchase of the Austal shares on the open market came as a surprise to Austal USA executives, who were convened in Mobile with Australian executives and Australian press for a board meeting when they learned of the news, USNI News understands.
A person familiar with the matter said Hanwha’s purchase should not have come as a surprise to Austal given the interest the South Korean company has expressed in the Australian defense contractor. Part of the appeal of Austal is the repair work performed at its Western Australia yard in Henderson, that person told USNI News.
“Austal USA is aware of Hanwha’s recent purchase of Austal shares,” Larry Ryder, Austal USA’s vice president for business development and external affairs, said in a statement provided to USNI News.
“Our full focus remains on continuing to deliver on our commitments to the U.S. Navy and U.S. Coast Guard. We are continuing to invest in growing our infrastructure in Mobile to expand our shipbuilding capacity to meet the current and future needs of our customers.”
Austal plans to meet Michael Coulter, who is Hanwha’s global chief executive officer and president, but Austal chairman Richard Spencer said the new stake does not mean Hanwha will get a seat on the board, The West Australian reported.
“We have complete access to global capital, we have a Rolodex that’s global … what value do you think you’re (Hanwha) going to bring above and beyond that?” Spencer reportedly said.
Hanwha Ocean, part of the Hanwha Group, last year purchased Philly Shipyard in Philadelphia, Pa., for $100 million. Hanwha Group sought to buy Austal in 2023 but scrapped the deal, which wanted to buy the Australian company for $662 million, in September.
In an April 2024 company news release, Austal acknowledged it had received Hanwha’s “unsolicited” bid and noted that any transaction would require government authorization because Austal builds ships for both the Royal Australian Navy and the U.S. Navy.
“The Austal Board, together with its advisers, has considered the Indicative Proposal in detail and engaged with Hanwha in relation to whether the transaction described in the Indicative Proposal would obtain the relevant regulatory approvals in Australia and the USA to enable it to proceed,” the company said at the time. “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.”
Hanwha’s entry into the U.S. shipbuilding market comes as the potential for foreign investment in U.S. yards gains traction among naval observers and some government officials. Former Navy Secretary Carlos Del Toro during his tenure encouraged foreign investment in U.S. shipbuilding to beef up the industrial base.
Before his inauguration, President Donald Trump in a January interview on The Hugh Hewitt Show said the U.S. may have to turn to allies to increase the rate of shipbuilding.
