Australian shipbuilding and marine technology company Austal has rejected a takeover bid by South Korea’s Hanwha Ocean, citing uncertainty over the approvals of Australian and US regulatory bodies of the acquisition. 

Austal confirmed receipt of the “unsolicited” bid, worth A$1.02bn ($662m), after reports in the media but said that it was particularly concerned about gaining approvals relating to its role as a partner to the Australian and US navies. 

The company particularly noted a recently signed memorandum of understanding (MOU) with the Australian Department of Defence relating to a Strategic Shipbuilding Agreement that highlighted a desire to keep naval shipbuilding in the country. 

A statement from Hanwha said: “Austal is a national asset and thus can only be sold to companies within the AUKUS alliance countries (US-UK-Australia). 

“But South Korea maintains a close military cooperation relationship with the U.S. and Australia, including conducting numerous joint exercises, as it is an important ally of both countries.” 

Despite the Austal board’s initial rejection of Hanwha’s bid, the company also said that it was open to further engagement with the South Korean manufacturer on the idea, if it was able to provide stronger certainty that the acquisition would be approved. 

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David Kim, executive vice president at Hanwha said the firm was confident it would gain approval.

“There is no foundation of the claim that the Foreign Investment Review Board (FIRB) would reject Hanwha’s acquisition of the company,” he said.

“Hanwha has already obtained FIRB approval for prior investments in Australia and has a proven track record of investment in Australia’s defence industrial base, being the contracted supplier of infantry fighting vehicles, self-propelled howitzers and ammunition resupply vehicles with significant investment in a Geelong manufacturing facility that employs local workers,” Kim added.

However, a regulatory filing by Hanwha revealed that no further discussions were currently underway despite efforts to engage with the board and Austal’s management. 

The takeover bid comes son after Austal began preparing to also enter the UK market, signing an MOU with Harland & Wolff to pursue shipbuilding opportunities in the country such as the Border Force vessel replacement programme.