A commercial ship in the dry dock at Austal USA’s new West Campus. (Photo provided by Austal USA.)

WASHINGTON — Australian shipbuilder Austal has received an unsolicited takeover bid from South Korean giant Hanwha — and while the Aussie firm is rejecting the offer at the moment, its statements leave the door open for a potential acquisition in the future.

The proposal, announced by both companies in dueling press releases today, would see the world’s 26th largest defense contractor add the 74th largest defense contractor to its portfolio, per the annual Defense News rankings. It would also expand the defense ties between Seoul and Canberra, following Australia’s potentially $7 billion deal to buy Hanwha’s Redback land vehicle, and represent yet another wave of growth for South Korea’s defense industry.

Under the Hanwha offer, Austal shareholders would receive $2.825 (AUD) per share. Although neither company has stated the total dollar value of the deal, Nikkei reports it was for $1.02 billion AUD ($662 million USD).

The catch: what Austal describes in its release as its ability to “obtain the relevant regulatory approvals in Australia and the USA to enable” the sale to go through.

“At present Austal is not satisfied that these mandatory approvals would be secured, however the company is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved,” the company statement reads, a clear invite for the South Korean firm to make another offer.

Hanwha, for its part, put out a statement calling reports that there would be regulatory hurdles due to Austal’s defense business as “baseless,” as the company is “confident” it can gain approval from the Australian Foreign Investment Review Board (FIRB).

RELATED: American arm of Korea’s Hanwha has a 10-year plan to become a US land systems prime

“There is no foundation of the claim that the Foreign Investment Review Board (FIRB) would reject Hanwha’s acquisition of the company,” said David Kim, executive vice president at Hanwha, in the statement. “Hanwha has already obtained FIRB approval for prior investments in Australia and has a proven track record of investment in Australia’s defence industrial base, being the contracted supplier of infantry fighting vehicles, self-propelled howitzers and ammunition resupply vehicles with significant investment in a Geelong manufacturing facility that employs local workers.”

Byron Callan, an analyst with Capitol Alpha Partners, said in a note to investors that for the purposes of clearing US hurdles, “Non-U.S. ownership of a U.S. shipyard should not be a major issue. Austal is an Australian company and the Constellation-class frigate is being built in Wisconsin by Fincantieri.” (He noted he does not have insight into whether Australian regulators would approve the deal.)

Last month, US Navy Secretary Carlos Del Toro visited Hanwha’s facilities in South Korea as part of an industry tour.

“In each of these engagements, I brought to the table a simple, yet profound opportunity: invest in America. I was enormously gratified by the strong interest expressed by the leaders of each of these world-class shipbuilders in establishing U.S. subsidiaries and investing in shipyards in the United States,” Del Toro said then.