Hanwha Buys Stake in Austal as it Seeks to Expand U.S. Shipbuilding Role

South Korea’s Hanwha Group is continuing its efforts to build its position in shipbuilding including the U.S. naval market by renewing its interest in Austal. Six months after reporting it was discontinuing its efforts to acquire Austal, Hanwha today announced it is moving to become the largest shareholder in the Australia-based shipbuilder.

Hanwha announced the acquisition of 9.9 percent of Austal’s shares in open market transactions in Australia. Under Australian securities law, foreign companies can only purchase a 10 percent stake without filing with regulators, a step that Hanwha reported it has taken today. In addition to the shares purchased, Hanwha has entered into a swap transaction for an additional 9.9 percent of the shares with an Australian securities firm using a mechanism that allows it to receive the interests of shares without direct ownership.

In a filing with the Australian Foreign Investment Review Board (FIRB), Hanwha declared its interest in becoming an investor with a 19.9 percent stake in Austal. Analysts are calling it a clever move to quickly deepen the relationship without the time required to renew the acquisition bid, but at the same time, it achieves a first level of review from Australian regulators.

It became public in April 2024 that Hanwha was proposing to acquire Austal, but the Australian shipbuilder immediately rejected the approach saying it did not believe it would gain regulatory approval. Hanwha dismissed it saying that it already had strong ties in Australia and that a combination would strengthen the capabilities of the company in its role as national interest in Australia. However, it later accused Austal of insisting on onerous conditions to proceed with the offer.

Hanwha has indicated that it is paying a 16 percent premium to the closing price of Austal’s shares on Monday to increase its holdings. It reported paying $117 million for the initial share of 41.2 million shares. The acquisition was done through an Australian subsidiary owned by Hanwha Systems and Hanwha Aerospace.

While Austal also builds high-speed ferries, offshore wind farm vessels, and oil and gas platform ships, Hanwha’s interest lies in its leadership role in naval shipbuilding. Hanwha highlights that Austal is one of the four key suppliers that directly build U.S. military vessels (along with Hutchison Ingalls, Lockheed Martin, and Fincantieri) and that Hanwha “plans to strengthen its position as a key player in the global shipbuilding and defense industry through this investment.”

Austal is reported to rank first, holding 40 to 60 percent market share in the U.S. small surface combatants and logistics support vessel sector. It has shipbuilding facilities in Mobile, Alabama and San Diego, California in the U.S. as well as Australia, the Philippines, and Vietnam. It recently highlighted its fundraising efforts to support further expansion of its U.S. operations. Austal is reported to have an orderbook valued at US$9 billion.

“As a strategic investor, we will support Austal’s growth and innovation and spare no effort in investing in strengthening the local defense industry and naval shipbuilding capabilities in Australia,” said Michael Coulter, President and Head of Overseas Business at Hanwha Aerospace. “Hanwha’s smart shipbuilding and defense industry capabilities can provide Austal with capital, network, operational and technical expertise.”

Hanwha said that its recent equity acquisition aims to strengthen its strategic partnership with Austal, not only in Korea and Australia but also in the United States, amid the favorable conditions of the global defense and shipbuilding industries.

The investment in Austal follows Hanwha’s acquisition of Philly Shipyard at the end of 2024. The company highlighted the opportunities to expand in U.S. shipbuilding and specifically for the U.S. government before Donald Trump took office and set expanding the U.S. Navy and restoring the U.S.’s shipbuilding capabilities as two of his first priorities.