Hanwha Group is laying the groundwork to directly enter core defense projects, including nuclear-powered submarines for the U.S. Navy. This follows Hanwha's preliminary proposal to acquire the U.S. subsidiary of Australian shipbuilder Austal (Austal USA). If the acquisition is successful, Hanwha will secure its second shipyard in the United States while also gaining a production base linked to the U.S. Navy supply chain through its partnership with General Dynamics Electric Boat.

Enterprise Value of $1.05 Billion to $1.2 Billion Proposed Hanwha Defense USA recently delivered a non-binding preliminary proposal to acquire the business entity and operating assets of Austal USA. In a regulatory disclosure, Austal stated that it received a proposed enterprise value of $1.05 billion to $1.2 billion (approximately 1.5 trillion to 1.7 trillion KRW).

The two sides have agreed to proceed on the condition of a thorough due diligence examination of Austal USA's business operations and financial condition, and Austal's board has granted Hanwha a four-week exclusivity period for due diligence. For the deal to materialize, approval from relevant U.S. authorities, including the Committee on Foreign Investment in the United States (CFIUS) and the Defense Security Cooperation Agency (DSCA), is essential. The proposal excludes Austal's facilities in Australia, the Philippines, and Vietnam, as well as its shares listed on the Sydney stock exchange.

Custom Shipyard for the U.S. Navy... Submarine Module Production Headquartered in Mobile, Alabama, Austal USA employs approximately 3,500 people and specializes in building vessels for the U.S. Navy and Coast Guard. It operates a ship repair facility in San Diego, California, and its indoor production lines, spanning over one million square feet, are capable of constructing both aluminum and steel vessels. The company also possesses maintenance, repair, and overhaul (MRO) capabilities utilizing a 9,000-ton-class floating dry dock.

Key track records include the construction of 19 Littoral Combat Ships (LCS) and 15 Expeditionary Fast Transports (EPF), and it is currently producing Offshore Patrol Cutters (OPC) and Landing Craft Utilities (LCU). Notably, Austal USA supplies submarine modules to General Dynamics Electric Boat. These modules are critical components used in building the U.S. Navy's Virginia-class attack nuclear submarines and Columbia-class strategic nuclear submarines.

Accelerating the Rebuilding of U.S. Shipbuilding... Positive Impact on 'MASGA' The pursuit of this acquisition is part of Hanwha's strategy to simultaneously expand both its merchant vessel and naval shipbuilding businesses in the United States. Following its acquisition of the Philly Shipyard in Philadelphia in 2024, Hanwha has prioritized investing hundreds of millions of dollars to modernize facilities, thereby contributing to the revitalization of the U.S. shipbuilding industry. Separately, Hanwha Defense USA is also preparing plans to build ammunition and propellant factories in Arkansas to supply the U.S. military.

Hanwha previously attempted to acquire all of Austal last year, but the deal fell through. Subsequently, in December 2023, the company secured a 19.9% stake in Austal with the approval of the Australian government, contingent upon data access and security conditions. If the acquisition of Austal USA proceeds, it is expected to create positive synergies for 'MASGA,' a shipbuilding cooperation project between South Korea and the United States.

Austal USA's Financial Risk Remains a Variable However, Austal USA's financial risk remains a challenge relative to the scale of the acquisition. According to Austal's disclosure, Austal USA is projected to incur approximately $175 million in non-cash operating losses in fiscal year 2026 due to not receiving early relief measures from the U.S. Department of Defense regarding existing contracts.