Austal Extends Hanwha's Due Diligence Period Over Sale of U.S. Subsidiary

Australian shipbuilder Austal announced that it has extended the due diligence period granted to Hanwha Group, giving the South Korean conglomerate more time to put together a formal offer for its U.S. business. The company confirmed that commercial negotiations with Hanwha over the terms of a potential transaction have already begun, while it continues to assess the tax implications of a possible deal.

Hanwha Defense USA had publicly disclosed in August a non-binding offer of between $1.0 billion and $1.2 billion for Austal's U.S. operation. A month later, U.S. investment firm Wildcat Infrastructure submitted its own proposal, with a higher valuation of between $1.25 billion and $1.35 billion on a cash-free, debt-free basis, though conditioned on four weeks of due diligence that Austal has yet to grant. Austal noted that it remains in ongoing talks with Wildcat, without specifying whether it will move forward with that review process.

The search for a buyer for its U.S. subsidiary marks a turnaround from Austal's position just over a year ago, when it rejected an offer from Hanwha to acquire the entire company, citing doubts about the South Korean group's ability to secure the necessary regulatory approvals in the United States and Australia. Since then, Austal has solidified its role as a prime contractor for the Australian Defence Force, which analysts say led the company to focus its strategy on its Australian business.

Austal USA is the sole builder of the Littoral Combat Ship (LCS) and participates in manufacturing modules for the Virginia and Columbia submarine programs, as well as for the U.S. Coast Guard's Offshore Patrol Cutters, despite its financial performance in the country having faced difficulties. After news broke of the extended deadline granted to Hanwha, Austal shares jumped as much as 11.5% to AU$4.18, their best intraday gain since August 11, according to Baird Maritime, while Financial Ports reported a 7.6% rise in the stock on Tuesday amid speculation over the bidding process.

Austal has not set a deadline for offers, but expects Hanwha to submit a binding proposal in the near term. Meanwhile, Wildcat remains without access to the company's data room, a situation that could lay the groundwork for a broader bidding contest for the shipbuilder's U.S. operations.