South Korean conglomerate Hanwha has once again fuelled takeover speculation around Austal after placing a high-priced order for 9.9 per cent of the shipbuilder’s stock.
Hanwha hired broking firm Jarden yesterday to acquire the stake in Austal, with an after-market offer to pay up to $4.45 per share.
That is a substantial premium to the pricing of Austal’s $200 million share placement, completed last week at a price of $3.80 per share.
Hanwha’s offer price is close to Austal’s 12-month high of $4.525.
Its move comes after earlier attempts to negotiate a takeover failed to gain support from either Austal’s board or the broader market.
The term sheet for the Hanwha offer said the Korean company has no intention of making a takeover bid “at this time”.
The 9.9 per cent stake is the maximum amount Hanwha can purchase without seeking approval from the Foreign Investment Review Board.
The Korean company has signalled it intends to apply for permission to lift its stake to 19.9 per cent.
Any move beyond that level would require Hanwha to make a full takeover bid for Austal, which would cost about $1.8 billion at its latest offer price.
The success of any takeover offer would rest with Austal’s two major shareholders.
Andrew and Nicola Forrest’s private company Tattarang holds a 19.6 per cent stake and took up its full pro-rate allocation in last week’s placement.
Tattarang also plans to nominate a director to join Austal’s board.
Hanwha has flagged its hopes of doing the same.
"Ultimately we believe a Hanwha position on the board will allow for the future value of Austal
to be maximised for all stakeholders by fully aligning interests,” Hanwha Defence chief executive and president Michael Coulter said in a statement today.
Austal founder and former chairman John Rothwell sold 13.2 million shares last week for proceeds of $50 million.
That sell-down opened up Austal’s share register, however Mr Rothwell retains 18.6 million shares or 4.9 per cent of the shares on issue.
Hanwha’s unsolicited takeover offer early last year was pitched at $2.825 per share.
The offer was quickly overtaken by the market, with Austal’s shares rising from about $2.00 a year ago to $4.50 recently.
The rally reflects the company’s improved fortunes, with an increased half-year profit and a $14.2 billion order book.
The $200 million placement was to help fund a big upgrade Austal is making to its shipbuilding infrastructure at Mobile, Alabama to service the US Navy and US coast guard.
Mr Coulter said Hanwha sought a partnership with Austal, and had demonstrated its commitment to global growth by building an armoured vehicle manufacturing facility and Geelong.
“Hanwha’s position as a global leader in smart shipbuilding will provide Austal access to capital, international relationships and operational and technical expertise which can accelerate the development of Austal’s business and in turn, enhance Australia’s sovereign defence capability, at a time when this capability is more important than ever," he said.
“Hanwha’s global defence strategy prioritises growing local, sovereign presence through investment and partnerships, as exemplified by our investment in land capability in Geelong and elsewhere around the world.
"We believe strongly that we can replicate that success with Austal, investing in sovereign capabilities both in Australia and with its global operations.”
