Australian shipbuilder Austal said on Tuesday it had rejected an A$1.02 billion ($661.9 million) takeover offer from South Korea’s Hanwha Ocean as it was unlikely to be approved by Australian and U.S. regulators due to the sensitivity of its operations.
The West Australia-based firm said it had received a bid at A$2.825 per share, representing a premium of 28.4% to Austal’s last closing price.
Austal signed an initial agreement with the Australian government in November which would see the company being selected as a strategic shipbuilder.
Austal is also a prime contractor designing, constructing and sustaining ships for the US Navy.
The company said on Tuesday it thought it was unlikely Hanwha’s bid in its current form would receive approval from Australian and overseas regulators.
Austal said government approval “is particularly relevant in relation to the proposal from Hanwha, given Austal’s position as the designer and builder of defence vessels for the Australian and U.S. navies and ownership clauses associated with defence contracts.”
The approvals needed would include Australia’s Foreign Investment Review Board (FIRB), the Committee on Foreign Investment in the U.S. (CIFIUS) and the U.S. Defense Counterintelligence and Security Agency.
“The company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved,” Austal said in a statement.
Austal’s market capitalisation before the bid stood at nearly A$800 million.
($1 = 1.5411 Australian dollars)
Reuters
