Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Hanwha's investment in Australian shipbuilder gains momentum
Austal's shipyard in Mobile, Ala. / Captured from Austal website
By Nam Hyun-woo
Hanwha Group’s investment in global defense shipbuilder Austal is picking up momentum following the U.S. government's approval of the Korean conglomerate's plan to increase its stake in the company to 100 percent.
According to Hanwha on Tuesday, the Committee on Foreign Investment in the United States (CFIUS) Friday approved the group’s request to acquire a 19.9 percent stake in Austal, and additionally cleared it to pursue full ownership, stating that there are “no unresolved national security concerns.”
Austal is an Australia-headquartered shipbuilder and defense contractor which also operates shipyards in Mobile, Ala., and San Diego. It is one of the primary suppliers of the U.S. Navy’s littoral combat ships and expeditionary fast transports. In the U.S. naval vessel market, its share ranges from 40 to 60 percent, with an order backlog of 14.2 billion Australian dollars ($9.25 billion).
In March, Hanwha acquired a 9.9 percent stake in Austal and requested regulatory approvals to CFIUS and Australia’s Foreign Investment Review Board (FIRB) to increase its stake to 19.9 percent.
CFIUS generally allows foreign investors to acquire less than 10 percent of voting shares in a U.S. company without prior approval, as long as the investment is for passive purposes. Similarly, Australia permits foreign investors to acquire under 10 percent of shares in a listed company without FIRB approval.
Hanwha said the U.S. approval signifies the U.S. government’s complete support for its proposed investment in Austal.
“The CFIUS outcome is evidence of the strong support we have within the U.S. government, based on our track record of collaboration with U.S. and allied partners, our expertise and technology and our performance in delivering on time and at scale,” Hanwha Global Defense CEO Michael Coulter said in a statement.
“It is also consistent with the significant interest we are receiving from the U.S. government for further transfer of our technology and practices from Korea to help uplift shipbuilding in the U.S.”
Asked whether the group intends to increase its stake beyond 19.9 percent, a Hanwha Group official said the matter “has yet to be determined.”
The U.S. approval is expected to exert a favorable influence on the Australian authority’s decision-making process.
In the Australian federal election held on May 3, the ruling Labor Party secured a decisive majority for a second consecutive term. In its campaign, the party pledged to streamline FIRB process by focusing scrutiny on high-risk investments while expediting approvals for proposals which do not compromise its national security.
If the Australian government approves the investment, Hanwha will become the largest shareholder, surpassing Tattarang Ventures which holds a 17.09 percent stake.
Hanwha Group has been seeking to take over Austal for years. In April last year, the group attempted to take over Austal for 1.02 billion Australian dollars, but failed upon opposition from Austal's board.
The Australian government has been expressing that it has no concerns on Hanwha’s takeover attempt, with Defense Minister Richard Marles saying in 2024 that “this is a matter for Austal, they are a private company.”