Hanwha Group has overcome a major regulatory hurdle to enter the U.S. defense shipbuilding market, according to Chosun Ilbo. Since March this year, Hanwha Group has been committed to acquiring a 19.8% stake in Australian defense shipbuilding group Austal, aiming to become its largest shareholder.
Austal is primarily responsible for building small surface vessels and logistics support ships for the US Navy, with a market share of up to 60%, ranking first. The company has shipyards in Mobile, Alabama, and San Diego, California, as well as in Australia, the Philippines, and Vietnam.
Since Austal, the target of the acquisition, is a shipbuilder that directly builds ships for the United States, the acquisition of Austal by Hanwha Group must be approved by both the Australian and US governments.
On June 10, Hanwha Group issued a statement saying that Hanwha Group’s proposed acquisition or investment in Austal had been approved by the US authorities, and that the Committee on Foreign Investment in the United States (CFIUS) had confirmed that the transaction “did not pose a national security issue.” The committee approved Hanwha Group’s proposal to acquire a 19.9% stake in Austal.
CFIUS is an interagency body responsible for reviewing the impact of foreign investments on US national security. Hanwha Group said that CFIUS’s confirmation notice marks a key milestone in the transaction.
If Australian authorities also approve the acquisition, it will mean that Hanwha Group will become the first South Korean defense company to directly or indirectly participate in the construction of US warships.
Michael Coulter, CEO of Hanwha Group’s global defense company, said the decision “symbolizes the trust and support Hanwha Group has earned from the US government,” noting that the company’s “technical capabilities, on-time delivery record, and budget management skills accumulated through years of cooperation with the US and its allies have been fully recognized.”
Hanwha Group also stated in its announcement that it plans to integrate its shipbuilding capabilities into Austal’s global operations to enhance the competitiveness of both companies, while actively pursuing joint business expansion in the US and Australian defense markets.
Austal still opposes acquisition after three rejections
However, regarding Hanwha Group’s public statement, on June 10, Austal remained opposed to the group’s proposed acquisition or investment plan and submitted a statement to the Australian Securities Exchange stating that it was “seeking independent verification” and written confirmation.
Austal stated in the document: “Based on informal discussions to date, Austal understands that the approval granted by CFIUS differs from what Hanwha Group has claimed, and the company is seeking written confirmation from CFIUS.”
According to reports, Hanwha Group’s acquisition of Austal began at the end of 2023. In April 2024, Hanwha Ocean, a subsidiary of Hanwha Group, proposed a $1.02 billion acquisition offer for Austal, but Austal rejected the offer on the grounds that it would be difficult to obtain approval from the Australian regulatory agency, the Foreign Investment Review Board (FIRB), and that its main business was sensitive.
After months of negotiations, in October 2024, Hanwha Ocean announced the termination of its acquisition talks with Austal, citing the failure to reach a reasonable agreement. However, Hanwha Group did not give up on acquiring Austal. Six months after announcing the termination of negotiations, Hanwha Group made another attempt to acquire Austal.
In March 2025, Hanwha Group acquired a 9.9% stake in Austal through open market transactions and is currently negotiating a swap agreement with an Australian investment company to acquire an additional 9.9% stake in Austal. Hanwha Group has announced plans to hold up to 19.9% of Austal’s shares. If approved, this would make the group Austal’s largest investor, surpassing the Forrest family’s 17% stake (the family became Austal’s largest investor in 2022).
In addition, under Australian and US law, Hanwha Group can make a passive investment of up to 10% in Austal without approval. Hanwha Group said in March this year that it chose to invest in Austal because its acquisition proposal was delayed, but did not rule out the possibility of further increasing its investment in Austal.
Apart from Austal’s unchanged opposition, FIRB has not yet made a decision on Hanwha Group’s investment plan for Austal. It is reported that the committee has a review period of up to six months, and the final decision rests with the Australian Minister of Finance.
According to the Australian Financial Review (AFR), Hanwha Group submitted three non-binding offers and underwent preliminary approval reviews in Australia and the United States. However, Austal rejected all proposals and publicly questioned whether Hanwha Group could obtain approval, citing that the company’s business is related to defense and is of national importance to Australia.
Austal stated that if Hanwha Group could first obtain approval in the United States and Australia, the company would discuss the relevant proposal; however, Hanwha Group claimed that Austal had set stringent conditions for due diligence.
Hanwha Group targets US shipbuilding business as it expands globally
Regarding Hanwha Group’s persistence in acquiring Austal, the Korean industry believes that its ultimate goal is the US shipbuilding business rather than the Australian local business, and that it is also in line with the group’s global expansion strategy.
To secure overseas markets, Hanwha Group completed the acquisition of the Philly Shipyard in Philadelphia, USA, by the end of 2024 and renamed it Hanwha Philly Shipyard. The shipyard was established in 1997, formerly known as the Philly Naval Shipyard of the United States Navy. It covers an area of 480,000 square meters and boasts the largest dry dock in the United States. The shipyard specializes in the construction of merchant ships for coastal transportation. Its core business also includes the construction, maintenance, and retrofitting of warships, government ships and offshore wind power ships.
Six months after the acquisition, Hanwha Group announced a $72 million investment to upgrade and renovate the Hanwha Philly Shipyard, increasing its annual production capacity from the current approximately 1.5 ships to a maximum of 10 ships by 2035—a roughly sevenfold increase from the current level. The investment will be used for shipyard upgrades and shipbuilding process automation. At the same time, Hanwha Group also plans to make the shipyard the first in the US to build LNG carriers and aims to increase its revenue to approximately US$4 billion within ten years.