Hanwha Aerospace, South Korea’s largest defence firm, has put a preliminary bid of up to $1.2bn for Austal’s U.S. shipbuilding unit, aiming to deepen its foothold in America’s naval supply chain. Austal will allow Hanwha four weeks of due diligence before finalising the offer. The deal follows earlier failed attempts to acquire Austal, Australia’s biggest shipbuilder. Canberra previously let Hanwha raise its stake to 19.9 % but capped its influence over the company.

Hanwha’s latest proposal excludes Austal’s operations in Australia, the Philippines and Vietnam. The U.S. arm of Austal, based in Mobile, Alabama, is expected to report an A$175mn operating loss for the year to 30 June, owing to legacy contracts. Austal’s shares spiked 18.5 % on the news, lifting the company’s market value to A$1.9bn (~$1.3bn), while Hanwha’s shares fell 4.5 %.

South Korea has become one of the world’s top ten defence exporters, buoyed by orders from Eastern Europe after Russia’s 2022 invasion of Ukraine. Hanwha’s backlog rose from Won20tn ($14bn) in 2022 to Won38.3tn this year. The group seeks to lift annual sales to Won70tn and operating profit to Won10tn by 2035, backed by overseas expansion and acquisitions such as the Philly Shipyard in Pennsylvania in 2024.