Austal, a global shipbuilding company and defense prime contractor based in Australia, has rejected a $2.82-per-share acquisition offer from Hanwha Ocean.
According to Austal, it considered the proposal with its advisers and concluded that Hanwha may encounter difficulties securing regulatory approvals as part of the acquisition process.
In a press release, Austal explained that the proposed deal would be subject to scrutiny by Australia’s Foreign Investment Review Board, the Committee on Foreign Investment in the United States and the U.S. Defense Counterintelligence and Security Agency since the company holds contracts to design and build vessels for the Australian and U.S. navies.
Austal also noted that it signed a memorandum of understanding with the Australian Department of Defence to negotiate a strategic shipbuilding agreement, which will position the company as the Commonwealth’s strategic partner for constructing vessels in Western Australia.
Accepting the proposal without certainty that Hanwha can secure mandatory approvals would provide the South Korean shipbuilder with unnecessary access to confidential financial records, forecasts and contracts, it added.
The Australian company is open to future engagement with Hanwha if the latter can prove its ability to obtain regulatory approvals.
