Austal Extends Hanwha Due Diligence as Talks Continue

Australian shipbuilder Austal extended the due diligence period for Hanwha Defense USA on October 14, granting the South Korean conglomerate more time to formulate a formal acquisition proposal for its American operations. The move comes as Austal simultaneously weighs a higher, competing non-binding indication of interest from United States-based Wildcat Infrastructure.

Hanwha Defense USA Extends Diligence Window

Hanwha Defense USA originally submitted a non-binding offer valued between $1.0 and $1.2 billion on August 10, requesting a due diligence review to evaluate the Australian shipbuilder’s U.S. operations. Austal confirmed on October 14 that while substantive data room issues have been closed out, a tail of lower materiality data requests remains outstanding. Austal shares jumped as much as 11.5 percent to AU$4.18 by 03:15 GMT on October 14, marking the stock’s strongest intraday gain since August 11. Austal Limited CEO Paddy Gregg approved the ASX announcement confirming that commercial negotiations regarding transaction terms have officially commenced.

Wildcat Infrastructure Proposes Higher Valuation

A month after Hanwha’s initial approach, Wildcat Infrastructure submitted a separate non-binding indication of interest proposing an aggregate enterprise value of $1.25–1.35 billion on a cash-free, debt-free basis. That proposal, disclosed in September, is conditional on four weeks of due diligence. Austal confirmed it remains in ongoing dialogue with Wildcat Infrastructure alongside its talks with Hanwha, though the company has not clarified whether Wildcat will proceed with its four-week review or if the dual interest will trigger a bidding war.

U.S. Defense Operations and Tax Consultations

Austal is seeking professional advice regarding various tax implications tied to a potential transaction. The company’s U.S. operations have faced financial performance challenges despite establishing the firm as a major prime contractor for the U.S. Navy and U.S. Coast Guard. Austal is best known for building the Littoral Combat Ship and has transitioned into steel construction for projects including Offshore Patrol Cutters and modules for the U.S. Virginia and Columbia submarine programs. Hanwha has sought to expand its footprint in the American defense market, previously acquiring Philly Shipyard, while Wildcat Infrastructure indicated it would maintain Austal’s U.S. brand and operations as a stand-alone platform.

Commercial Negotiations and Binding Offers

Austal expects Hanwha to produce a binding offer as commercial discussions proceed, representing a sharp pivot from a little over a year ago when Austal rejected Hanwha overtures to acquire the entire company. At that time, Austal questioned Hanwha’s ability to secure regulatory approvals in Australia and the United States. Since then, Austal finalized a strategic shipbuilding partnership and position as a prime contractor for the Australian Defence Force, shifting focus toward its domestic operations even as evaluation of the U.S. business continues.