Hanwha Extends Due Diligence for Austal USA Acquisition

A view of Hanwha Ocean’s Geoje shipyard in March. (Yonhap) Hanwha Group has reportedly resolved key due diligence issues for the acquisition of the US division of Australian defense shipbuilder Austal and has commenced negotiations on the terms of the deal. According to foreign media outlets including Reuters and Australian defense publication Defence Connect, Austal stated on Oct. 14 local time that it has extended the due diligence period regarding Hanwha Defense USA’s proposal to acquire its U.S. division. Austal explained that most of the major issues raised during Hanwha’s due diligence process have been resolved, and currently, only some additional materials are being reviewed. Both parties have entered into negotiations on specific deal terms, and tax matters related to the acquisition are also under review with advice from external experts. Hanwha Defense USA, the U.S. subsidiary of Hanwha Aerospace, submitted a preliminary, non-binding proposal in August to acquire Austal’s U.S.division for an enterprise value of $1.05 billion to $1.2 billion. Hanwha has been reviewing the U.S. division’s financial status and business operations through due diligence, and with this period extension, it has secured time to verify additional materials and decide whether to make a formal proposal. Hanwha Group is pursuing the expansion of its shipbuilding business in the US following its acquisition of Philly Shipyard in the U.S. in 2024. If it secures Austal’s U.S. division as well, it will additionally acquire local production facilities related to the construction of U.S. Navy vessels. However, Austal is also continuing discussions with other prospective buyers besides Hanwha. US investment firm Wildcat Infrastructure presented a non-binding expression of interest in September for Austal’s U.S. division at an enterprise value of $1.25 billion to $1.35 billion. The upper limit of this proposal is $150 million higher than Hanwha’s. Austal’s share price rose following the announcement of the due diligence extension and the commencement of negotiations. On Oct. 14 in the Australian stock market, Austal’s share price recorded A$4.18, up 11.5% during intraday trading.