Hanwha has acquired a stake in Austal, an Australian shipbuilding and defense company, marking the beginning of its full-scale expansion into the global market. Austal is one of the four key suppliers that directly build ships for the U.S. Navy. Hanwha Group plans to strengthen its position as a key player in the global shipbuilding and defense sectors by strategically investing in response to the U.S.’s growing interest in South Korea’s shipbuilding industry.
Hanwha Poised to Become Austal’s Largest Shareholder
Hanwha announced on Tuesday that it had directly acquired a 9.9% stake in Austal through an over-the-counter transaction on the Australian Securities Exchange on Monday. In addition to this stake, Hanwha also signed a total return swap (TRS) agreement through a local Australian securities firm for an additional 9.9% stake. The following Tuesday, Hanwha applied to the Australian Foreign Investment Review Board (FIRB) to approve its 19.9% stake investment in Austal. This investment was made through a local Australian subsidiary, with Hanwha Systems and Hanwha Aerospace holding 60% and 40% of the shares, respectively.
If Australian authorities approve, Hanwha Group will surpass Tattarang Ventures (17.09%) as Austal’s largest shareholder. Considering Australian companies’ board-centric management system, Hanwha intends to secure a seat on the board and participate in management through this investment.
Michael Coulter, head of Hanwha Aerospace’s overseas business, stated that Hanwha expects to play a significant role in the global defense and shipbuilding industries through its cooperation with Austal. As a strategic investor, the company plans to support Austal’s growth and innovation while continuing to strengthen Australia’s domestic defense industry and naval shipbuilding capabilities.
In April 2021, Hanwha proposed acquiring Austal for approximately 1.02 billion Australian dollars (about $650 million). However, the acquisition attempt failed in September of the same year. Austal’s board rejected the proposal, citing concerns that Australian and U.S. authorities would not approve it.
However, the situation changed after Donald Trump’s election victory. In a phone call with South Korean President Yoon Suk Yeol in November 2024, Trump proposed cooperation in shipbuilding based on the South Korea-U.S. alliance. Additionally, the U.S. Congress has been actively working to revive its domestic shipbuilding industry, creating a more favorable environment for Hanwha’s acquisition. As tensions between the U.S. and China have intensified, cooperation between the U.S. and South Korea in shipbuilding has strengthened, making U.S. regulatory approval for the acquisition highly likely. Since taking office, Trump has introduced policies such as the Ships for America Act and the Ensuring Naval Readiness Act, expanding shipbuilding industry cooperation with allies, including South Korea.
Synergies Expected from Expanding U.S. Defense Contracts
Hanwha aims to strengthen strategic partnerships in Australia and the United States with this equity acquisition.
Hanwha already took a significant step in December 2024 by becoming the first South Korean company to acquire the U.S. Philly Shipyard, leading global market expansion efforts. Austal operates shipbuilding facilities in Henderson, Western Australia, Mobile, Alabama, San Diego, California, the Philippines, and Vietnam.
Notably, Austal is one of the four key suppliers to the U.S. Navy, with an order backlog of 14.2 billion Australian dollars. It holds a 40-60% market share in the U.S. for small surface vessels and logistics support ships, ranking first in these categories. If Austal’s expertise is combined with Hanwha’s global shipbuilding capabilities and strong network with the U.S. Department of Defense and Navy, significant expansion in future contracts is expected.
Jang Won Jun, a research fellow at the Korea Institute for Industrial Economics & Trade, commented, “Hanwha’s acquisition of Austal’s stake appears to be aimed at actively expanding into the U.S. market, especially as the Trump administration has requested South Korea’s participation in naval shipbuilding projects. Acquiring U.S. shipyards or companies is the fastest and most efficient way to secure contracts for new ship construction, maintenance, repair, and overhaul (MRO) in the U.S. Absorbing Austal’s organization, systems, and network will enable Hanwha to enter the market at an accelerated pace.”
