By Kwanwoo Jun
Shares of South Korean defense company Hanwha Aerospace and its siblings rallied, after their parent claimed to have won Washington's approval to boost its stake in Austal, an Australia-based U.S. Navy shipbuilder.
Hanwha Group, which seeks U.S. and Australian regulatory approval to increase its stake in Austal to 19.9% from 9.9%, said Tuesday that the Committee on Foreign Investment in the U.S. had cleared the South Korean conglomerate to raise its Austral shareholding up to 100%.
The approval from Washington "is evidence of the strong support we have within the U.S. government," Hanwha said in a statement.
Hanwha said it was still awaiting separate approval from Australia's Foreign Investment Review Board.
Shares of Hanwha Group's holding company, Hanwha Corp., ended 3.4% higher. Its affiliates' stocks mostly finished strongly with aircraft-engine and howitzer maker Hanwha Aerospace up 6.4% and shipbuilder Hanwha Ocean 4.4% higher. Military communications and surveillance equipment developer Hanwha Systems closed 20% higher.
However, Austal said Tuesday that informal talks suggested the CFIUS approval was different to that claimed by Hanwha, and it was seeking written confirmation from the U.S. that Hanwha had been cleared to boost control over the company.
The CFIUS didn't immediately respond to requests for comment.
Hanwha's application to increase its equity investment in Austal still remained under consideration by the FIRB in Australia, Austal said.
President Donald Trump's administration and Congress have been increasingly turning to its Asian military allies to enhance the U.S.'s shipbuilding industry and build up its naval fleet, which has faced challenges with delays in ship deliveries and cost overruns.
South Korea, a close U.S. military ally, is home to the world's leading shipbuilders, including Hanwha which has close business ties with the U.S.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
06-10-25 0312ET
