Austal Limited (AU:ASB) turned down the takeover offer from the South Korea-based Hanwha Group, amid regulatory concerns over the deal. Austal expressed doubts about getting the necessary approvals from the regulators in the U.S. and Australia, mainly due to the sensitive nature of its operations. However, it also stated that it is open to further discussions if Hanwha offers assurance regarding the approval.
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Since the announcement, shares have surged (10.45% as of this writing), bringing the year-to-date gain to nearly 18%.
Austal is a prominent shipbuilding company that specializes in designing, constructing, and servicing innovative defense and commercial vessels.
More Details About the Offer
According to the statement released by Austal, the takeover proposal offered AU$2.825 cash per Austal share to its shareholders. The offer was over 28% above Austal’s previous closing price.
The deal requires various approvals–not only from Australia’s foreign investment regulator–but also from U.S. government agencies, due to Austal’s contracts with the U.S. Navy.
The offer also highlights Australia’s significant military upgrade, one that has piqued the interest of international players in its defense companies. Australia is revamping its defense strategies amid growing tensions in East Asia, notably concerning Taiwan and the contested South China Sea.
What is the Price Target for Austal?
According to TipRanks’ consensus, ASB stock has received a Moderate Buy rating, backed by two Buy and one Hold recommendations. The Austal share price target is AU$2.45, which is close to the current trading levels.
