A foreign firm would require considerable daring to pursue the acquisition of a significant U.S. navy shipbuilder at this time. This caution is exemplified by South Korea’s Hanwha, which recently acquired a modest 9.9% stake in the Australia-listed shipbuilder Austal ASB, with ambitions to increase this share.
Such a cautious approach is understandable given the protectionist tendencies and nationalist policies shaping geopolitics under U.S. President Donald Trump’s administration. In general, Hanwha’s approach of acquiring a smaller percentage before attempting a larger takeover is not uncommon.
Many foreign suitors for Australian firms initially obtain just under a 20% stake to secure enough control to thwart other bidders from achieving the necessary 75% shareholder approval. However, Hanwha faces an existing hurdle with Tattarang Ventures, which holds a substantial blocking stake of 19.6% in Austal.
The South Korean group has previously attempted to enter into discussions with Austal, initially expressing interest in 2023 when other U.S. investors, including Cerberus Capital Management, were also vying for the company. Despite Hanwha’s offer of A$1 billion ($634 million) being acknowledged by Austal in April 2024, the acquisition discussions fell through due to regulatory uncertainties posed by both Australian and U.S. authorities.
Overcoming these regulatory challenges seems even more complex now. While South Korea is an ally of the U.S., and its maritime unit, Hanwha Ocean, has licensing to service U.S. Navy vessels, there are stringent conditions connected to Austal’s contracts.
These implications heighten the scrutiny and potential obstacles regarding foreign ownership of critical defense assets, making Hanwha’s bid more contentious. Given Austal’s status as the sole domestic supplier to Australia’s navy, the likelihood of its ownership being transferred abroad—regardless of it going to an allied nation—is rapidly becoming less palatable for many stakeholders.
Hanwha’s strategy to boost its voting stake to 19.9% comes with the awareness that such a move would require governmental approval, indicating a thoughtful, measured approach to navigating the shifting geopolitical landscape.