Is Austal a take-over target?

Juicy U.S. Navy awards like T-AGOS contract are seen by some as making Austal a tempting takeover target [Image: Austal]

Back on June 6, Australian shipbuilder Austal Limited, which is, of course, the parent of Mobile, Ala., based Austal USA, published a stock exchange announcement saying:

“Austal Limited (Austal) (ASX: ASB) refers to recent media speculation regarding possible corporate activity involving Austal.

“Austal is regularly involved in discussions with potential parties concerning strategic initiatives to create value for its shareholders. While discussions may take place from time to time, there can be no certainty that any opportunity will proceed.

“Austal will keep shareholders informed in accordance with its continuous disclosure obligations.

“This ASX announcement has been approved and authorized for release by Paddy Gregg, Austal Limited’s Chief Executive Officer.”

So what’s that all about? Presumably stories in the Australian financial media saying that Austal Limited is a take-over target, and that the cherry on top of the sundae is Austal USA and its growing portfolio of U.S. Navy business, including its recent T-AGOS award with a $3 billion plus potential.

The media speculation seemed to started by the Australian Financial Review (AFR) which said on June 5 that Austal Limited had brought in JP Morgan and Perth-headquartered corporate advisory Poynton Stavrianou as it considered approaches from suitors interested in taking the company private

Since then, the AFR and other financial media have run a string of stories naming potential suitors that have included JF Lehman, Cerberus Capital Management, Arlington Capital Partners, and most recently Korea’s Hanwha Ocean. All of these stories contain phrases like “it is understood that” and name no checkable sources.

None of this has hurt the prices of Austal Limited’s stock, which on May 18 stood at AUD 1.63 and today reached AUD 2.79.

Stay tuned.

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