Hanwha Group, led by Vice Chairman Kim Dong-kwan, is rapidly expanding its territory in the defense, maritime, and aerospace sectors. The company is pursuing the acquisition of Austal USA, a shipbuilder for the U.S. Navy, while also increasing its stake in Korea Aerospace Industries (KAI) to over 15%, signaling an interest in gaining control.
According to industry sources, Hanwha has made a non-binding conditional offer to acquire the business and operational organization of Austal USA, with the proposed acquisition price estimated between $1.05 billion and $1.2 billion.
This acquisition proposal aims to enhance the competitiveness of the MASGA project. Austal USA has delivered 34 vessels to the U.S. Navy and has been involved in the construction of Littoral Combat Ships (LCS) and Expeditionary Fast Transport (EPF) vessels. In 2022, it also produced modules for nuclear-powered submarines and continues to manufacture various vessels for the U.S. Coast Guard, including towing, rescue, and landing craft.
The scope of the acquisition is limited to Austal USA's shipyards in the United States and does not include its publicly traded shares in Australia or key shipbuilding operations in Australia and Asia. The Austal board will review the proposal and has granted Hanwha a four-week due diligence period to negotiate specific acquisition terms. However, the deal is still subject to U.S. government approval and formal contract signing.
Hanwha Group's acquisition of KAI's management rights is also within reach. The day before, Hanwha Systems announced it had secured a 4.98% stake in KAI, bringing the group's total stake above 15%. Hanwha will soon initiate the merger notification process. Under fair trade laws, acquiring more than 15% of a listed company requires a merger notification within 30 days. The Fair Trade Commission will review the potential impact on market competition and may require a reduction in stake if issues arise. However, industry experts believe Hanwha is likely to pass the review since it is not the largest shareholder of KAI and the core businesses of both companies do not overlap significantly.
KAI is considered a key piece in Hanwha Group's aerospace puzzle. While Hanwha Aerospace handles aircraft engines and Hanwha Systems manages radar and avionics equipment, the group currently lacks the capability to design and produce complete aircraft. Securing management rights in KAI would enable the establishment of a comprehensive aerospace defense value chain, connecting engines and avionics to complete aircraft.
Significant investments in the space sector are also anticipated. Vice Chairman Kim Dong-kwan announced last month at a national report meeting on advanced industrial development in the Yeongnam region that Hanwha plans to invest 55 trillion won in aerospace and artificial intelligence (AI) by 2040. Hanwha Aerospace is set to invest approximately 23 trillion won in the development and production of launch vehicles and testing infrastructure, while Hanwha Systems plans to allocate around 20 trillion won for low Earth orbit satellites, space AI data centers, and satellite communication networks.
In July, during a presentation of the AI space power strategy in Jinju, Gyeongnam, Kim stated, "South Korea should no longer view space and aviation as separate industries. When space and aviation, AI and defense are interconnected, we can truly leap forward as a leading AI space power."
* This article has been translated by AI.
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