South Korean conglomerate Hanwha Corporation (KOSE:A000880) is believed to have recently renewed its interest in takeover target Austal Limited (ASX:ASB), putting forward an indicative offer for the global shipbuilder and Defence prime contractor in recent weeks, likely to be more than $895 million. It is understood that the offer was at a premium of about 30% to Austal's share price at the time, and Hanwha was working with investment bank UBS as its adviser. However, the deal was not disclosed by the Austal board because of the high probability that the government would not grant permission for the business to take control of a group carrying out Defence contract work for the government.

Austal signed an initial agreement with the government in November to establish a Strategic Shipbuilding Agreement between it and the commonwealth in which the company becomes Australia's naval ship builder in Western Australia. If a binding deal is signed, Austal will construct and deliver eighteen 50m steel-hulled landing craft vessels to the Army, to be constructed at Henderson, south of Perth, plus other large landing craft. While Hanwha is considered out of the question as an owner of Austal, with the Foreign Investment Review Board likely to block an acquisition based on security concerns, a US-based group may be more palatable, given Australia's relationship through AUKUS, a trilateral security partnership for the Indo-Pacific region between Australia, Britain and the US.

Among the private equity firms that have taken a look at the business in the past are US-based private equity firm Cerberus Capital Management and Arlington Capital Partners. The US business is far larger and over time has been considered more attractive to suitors. But it has strict security restrictions, including a rule that no one from the parent company can attend sites without permission from the Pentagon.

One possibility is that Austal demerges the US arm, sells it to private equity or relists its business in the US.