Austal shares slide after Chalmers approves Hanwha stake increase
Make us a preferred source
Make us a preferred source on Google
More news: Austal shares fell around 3% after emerging from a trading halt this morning, following Treasurer Jim Chalmers' decision to approve South Korean defence company Hanwha’s increased shareholding in the shipbuilder from 9.9% to 19.9%.
Austal CEO Paddy Gregg said the company will "respect" Chalmers' decision, but confirmed that it has not been briefed on the "strict conditions" imposed as part of the treasurer's announcement.
The company noted that Hanwha has previously indicated that if it was approved to take its shareholding to 19.9%, it would seek to partner with Austal on various shipbuilding opportunities and seek a board position.
Austal said its board will closely review any opportunities and risks associated with those partnership and board position requests.
Austal also flagged that any future change of control transaction by Hanwha to move beyond 19.9% would require seperate approvals from the Foreign Investment Review Board and the US Defense Counterintelligence and Security Agency.
What they said: "Treasurer Chalmers has made his decision and we respect that decision," said Gregg.
"With the clarity provided by this decision, the board and management are firmly focused on delivering value for all Austal shareholders as Australia's sovereign shipbuilder under the Strategic Shipbuilding Agreement, a major contributor to the US defence industrial base, and with significant growth opportunities at our US and Australasia operations."
Treasurer approves Hanwha’s increased shareholding in Austal
The news: Treasurer Jim Chalmers has greenlit Korean defence firm Hanwha’s proposal to increase its shareholding in ASX-listed shipbuilder Austal from 9.9% to 19.9%, subject to “strict conditions”.
The context: Hanwha will not be allowed to increase its shareholding above 19.9% and will remain a minority shareholder.
Chalmers said that the Foreign Investment Review Board’s “unequivocal advice” was to not object to the proposal subject to strict conditions and incorporates advice from the Department of Defence, Department of Home Affairs, and the Department of Foreign Affairs and Trade, as well as Australia’s national security agencies.
He added that the decision “was not taken lightly and comes after extensive consultation and long and careful deliberation” following a robust process that considered “all the relevant economic, national security and other national interest issues”.
The conditions relate to governance, data and information and security including:
- Limits on Hanwha’s access to sensitive information
- Limits on the storage of sensitive information
- Stringent criteria on any Hanwha nominee to Austal’s board
The shareholding increase was greenlit by the Committee on Foreign Investment in the United States in June. In 2024, Austal rejected a $1.02 billion takeover proposal from Hanwha citing concerns the deal would not receive regulatory approval.
Chalmers also stated that “Australia welcomes foreign investment and operates a non‑discriminatory foreign investment framework to ensure foreign investment is in our national interest”.
What they said: “These conditions build on the strong safeguards that already apply to Austal Defence Australia as Australia’s Strategic Shipbuilder. Austal is an Australian-based global leader in shipbuilding and defence capability,” Chalmers said.
“It will continue to play an instrumental role in building Australia’s defence industry, strengthening our supply chains and boosting our skills and economic resilience.
“It is a key pillar of our plan to boost local manufacturing and industry capabilities and remains an essential part of our Future Made in Australia agenda.”
