Shipbuilder deal surfs dicey geopolitical waves

Austal

12/08/2026 13:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Antony Currie
MELBOURNE, Aug 12 (Reuters Breakingviews) - The U.S. war machine is helping raze the M&A defences of a key shipbuilder. On Tuesday Australia's Austal ASB.AX granted rival Hanwha access to its books to shore up an up to $1.2 billion takeover offer for its U.S. operations. It comes two years after the Antipodean manufacturer of everything from high-speed ferries to parts for American nuclear submarines rejected its South Korean suitor's tilt at the whole firm. This time round, the target seems ready to concede to an attacker that's surfing the geopolitical waves well.
Hanwha's previous campaign, armed with an offer for all of Austal of just $640 million, faltered not just on valuation. There were also concerns that both Canberra and Washington would scupper the mission. The U.S. Navy had inserted some pretty stringent takeover clauses into its contracts with Austal, for instance. And there was no guarantee that Hanwha would either get approval, or get approval quickly, from Australia's Foreign Investment Review Board. So it dropped the bid and instead took a 9.9% stake, intending to double it once getting FIRB approval for that move. That landed in December, but Hanwha held fire.
Now it seems clear why. Even though its latest offer is nearly equal to Austal's entire market capitalisation and the U.S. unit accounts for three-quarters of Austal's revenue and operating profit, Hanwha probably doesn't need to get an aye aye from Canberra to buy it. Delays in resolving contract problems stateside may well have sapped resistance among the target's board members a tad, too: the stock dived when Austal flagged the issue in February, and then on Tuesday the company revealed it necessitated a $123 million non-cash strike that will result in an operating loss for the year.
On top of that, Donald Trump's offensive to improve the number and strength of the U.S. naval fleet plays right into Hanwha's hands. It and compatriot firms already build vessels in America, but the U.S. President has explicitly mentioned their growing role, saying at an event in June that his administration will "probably look at some of these companies that are coming in from South Korea and other places, and they're working with us on ships". That renders any M&A-limiting contract terms defenceless.
Granted, Canberra may not be keen to lose some handy Aussie leverage with Washington. And Tattarang Ventures, Fortescue founder Andrew Forrest's private investment arm, may have the power to scupper a sale, if it chooses to, with its near-20% stake. But the chances of Hanwha piloting an Austal deal into port look better than ever.
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CONTEXT NEWS 
      Hanwha Defence USA, a unit of South Korea's Hanwha, on August 11 offered to buy the U.S. business of Australia-based shipbuilder Austal for between $1.05 billion and $1.2 billion in cash. Austal's board has agreed to grant Hanwha access to company information to conduct due diligence.
On the same day, Austal said that the U.S. unit's prolonged negotiations over contractual claims with the U.S. navy mean it will take a A$175 million ($124 million) hit to its earnings before interest and taxes. As a result, the company will report an operating loss for the year to the end of June 2026 of A$113 million.
Hanwha owns 9.9% of Austal outright, having bought the stake in 2025, a year after launching and then abandoning a $1 billion takeover offer for the whole company. The company received approval in December from the Australian government to increase its share to 19.9%, but has yet to do so; it does, though, still hold a total return swap that gives it economic exposure to 9.9% of Austal.
Austal shares closed in Sydney 17.5% higher on Tuesday at A$4.51 each.

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on CURRIE/antony.currie@thomsonreuters.com))