Hanwha Defense USA, a subsidiary of Hanwha Aerospace, made a preliminary, non-binding offer to acquire Austal’s U.S. business, the company announced on Monday.
“Any deal will be contingent on due diligence that permits a thorough evaluation of Austal USA’s operations and financials, including newly disclosed information,” Hanwha Defense USA spokesman James Hewitt said in a press release. “Hanwha has made it a priority to significantly contribute to revitalizing American shipbuilding and is exploring a range of options to expand our footprint in the United States.”
In an ASX filing, Australia’s shipbuilder Austal confirmed the receipt of an indicative, non-binding and conditional offer from Hanwha Defence USA, Inc. (Hanwha) to acquire the business entities and operations of Austal USA for an indicative enterprise value of US$1.05 – 1.20 billion on a cash and debt-free basis, subject to a normalized level of working capital and other customary transaction adjustments.
The filing said that the Austal board and its advisers have carefully assessed the proposal and determined that it merits further evaluation, approving Hanwha to undertake due diligence related to Austal USA to improve the certainty of any proposal.
The proposal does not contemplate the acquisition of any publicly traded shares in Austal or Austal’s core Australasia operations based in Australia, the Philippines and Vietnam.
The Austal Board has determined to provide Hanwha a four-week period, commencing from the date that due diligence information requested by Hanwha is made available, to undertake due diligence related to Austal USA (including a review of Austal USA contracts and the announced trading update), engage with key counterparties including the US department of war and US navy/coast guard, and if required, the Australian department of defence, and progress transaction documentation to enable Hanwha to present a more certain proposal.
The proposal is subject to several key conditions, including satisfactory completion of due diligence by Hanwha, regulatory approvals, agreeing definitive transaction agreements, and other customary transaction conditions.
In its filing, the company added: “Should a more certain proposal be received from Hanwha, that proposal will be assessed by the Austal Board, having regard to the inherent value of Austal USA, and acting in the best interest of all Austal shareholders.”
Austal said there is no certainty that a further proposal will be received, or that if a further proposal is received, it will result in a definitive agreement.
Austal is Australia’s global shipbuilder and defence prime contractor designing and constructing commercial and defence vessels. For almost 40 years Austal has contracted more than 360 vessels for over 122 commercial and defence operators in 59 countries, worldwide. It has shipyards in Australia, the United States of America, Philippines and Vietnam with service centres worldwide.
