Hanwha's $1.2 billion offer for Austal USA shipbuilder

South Korea's Hanwha has made a preliminary offer worth up to $1.2 billion to acquire Austal USA, potentially giving the Korean defense giant control of one of the largest U.S. naval shipbuilders as Washington pushes to expand domestic shipbuilding capacity.

Hanwha Defense USA confirmed Monday that it submitted a preliminary, non-binding offer to acquire Austal's U.S. operations, with any transaction subject to due diligence.

"Hanwha Defense USA has made a preliminary, non-binding offer to acquire Austal's U.S. business," spokesman James Hewitt said. "Hanwha has made it a priority to significantly contribute to revitalizing American shipbuilding and is exploring a range of options to expand our footprint in the United States."

Austal separately disclosed that the proposal values Austal USA at between $1.05 billion and $1.20 billion on a cash- and debt-free basis. The offer covers Austal USA's business entities and operations but does not include shares in publicly traded Austal Limited or the company's shipbuilding operations in Australia, the Philippines and Vietnam.

The Austal board has determined that the proposal warrants further evaluation and has granted Hanwha a four-week period to conduct due diligence once requested information is made available. Hanwha will also be permitted to engage with key government customers, including the U.S. Navy and Coast Guard.

Any transaction would still face a potentially significant regulatory review because of Austal USA's role in sensitive U.S. defense programs. Austal said required approvals could include reviews by the Committee on Foreign Investment in the United States, Defense Counterintelligence and Security Agency and U.S. antitrust authorities.

The approach comes as Austal USA faces a major financial setback tied to several U.S. government shipbuilding programs.

Austal said its U.S. business is expected to record an EBIT loss of approximately $175 million for fiscal 2026 after determining it would not receive accelerated contractual relief for certain legacy contracts. The company attributed the provisions to its Towing, Salvage and Rescue Ship (T-ATS), Auxiliary Floating Dry Dock Medium (AFDM) and Landing Craft Utility (LCU) programs.

The provisions have prompted Austal to dramatically revise its group outlook. The company now expects an approximately $113 million EBIT loss for fiscal 2026, compared with previous guidance for a profit of roughly $110 million.

Despite the losses, Austal remains one of the most important players in the U.S. naval shipbuilding industrial base. Its Mobile, Alabama, shipyard has expanded beyond its traditional aluminum construction into steel shipbuilding and is working across several Navy and Coast Guard programs.

Among them is the Coast Guard's Offshore Patrol Cutter program. Austal USA is building the second-stage OPCs under a contract covering up to 11 cutters potentially worth $3.3 billion. Construction of the first Austal-built cutter, Pickering (WMSM 919), began in 2024, with delivery scheduled for 2027.

The company also manufactures submarine modules for the U.S. Navy's nuclear submarine programs, an area Austal said continues to operate with strong profitability despite problems on its surface ship contracts.

For Hanwha, an Austal USA acquisition would mark another major expansion of its presence in American shipbuilding.

Hanwha acquired the former Philly Shipyard in late 2024 and has since positioned the Philadelphia facility as a centerpiece of its U.S. maritime ambitions. The yard is completing the five-ship National Security Multi-Mission Vessel program while expanding into commercial and government work.

Last month, Hanwha Philly Shipyard and TOTE Services were selected to deliver new Missile Range Instrumentation Vessels supporting the Trump administration's Golden Dome missile defense initiative. The first vessel, Golden Defender, is scheduled for delivery in 2030.

Hanwha has also announced plans to invest billions of dollars in expanding the Philadelphia yard as the company seeks a larger role in the U.S. shipbuilding market.

Adding Austal USA would give Hanwha a second major U.S. shipyard and significantly deepen its exposure to Navy and Coast Guard construction at a time when the Trump administration is seeking to rebuild domestic shipbuilding capacity and bring additional private investment into the sector.

For Austal, however, a sale is far from certain. The company emphasized that Hanwha's proposal remains indicative, non-binding and conditional. There is no guarantee that the due diligence process will result in a revised offer or definitive transaction.

Austal said its board will evaluate any subsequent proposal against the "inherent value" of Austal USA and the interests of shareholders.