South Korean defense conglomerate Hanwha has officially abandoned its bid to acquire Australian shipbuilder Austal, following a year of contentious negotiations that highlighted significant regulatory obstacles.
The proposed merger, which aimed to strengthen defense ties between Australia and South Korea, was first announced in September 2023 but faced skepticism from Austal's board regarding regulatory approvals.
In a letter dated Sept. 25, Hanwha CEO Hyek Woong Kwon cited Austal’s unexpected demands and lack of cooperation as key reasons for terminating discussions. Among these was Austal's insistence on a $5 million fee if regulatory approvals were deemed unlikely, a condition Kwon labeled “unprecedented” and “wholly unreasonable."
Despite multiple revised offers and preliminary regulatory assessments from both the U.S. and Australia, Austal expressed concerns about the feasibility of securing necessary approvals. The company also cancelled agreed site visits, further straining relations.
This withdrawal signals the complexities and challenges inherent in international defense acquisitions, where national security interests often intersect with corporate ambitions.
In June 2024, Hanwha entered into a share purchase agreement of Philly Shipyard for $100 million.
