Austal chairman John Rothwell to step down amid Hanwha takeover battle

The long-serving chairman and founder of shipbuilder Austal, John Rothwell, has stepped down from the role amid a takeover battle with Korean conglomerate Hanwha.

One of the US Navy’s Joint High Speed Vessels, built in Western Australia by Austal.

The long-serving chairman and founder of shipbuilder Austal has stepped down from the role amid a takeover battle with Korean conglomerate Hanwha.

John Rothwell, who has served as Austal’s chairman since establishing the company in Perth in 1987, will make way for former US secretary of Navy Richard Spencer, but will remain on the company’s board as a non-executive director.

In a statement to the ASX on Thursday, Mr Rothwell, who remains one of the company’s largest shareholders with a 9 per cent stake, said it was the right time to hand over the reins.

“I’m incredibly proud of what Austal has achieved during my time as chairman,” he said.

“I have been considering stepping back from the chair role for a few years now and, having just turned 80 and with an excellent replacement in Richard, the time is right.

“The company is on a very strong footing, but it is entering its next phase of growth as a strategic defence shipbuilder, so I remain actively involved with Austal as an ordinary board member until the transition is complete.”

The leadership transition, which takes effect from July 1, comes after the rejection of a $1bn takeover approach from Hanwha in April.

Austal rejected the bid at the time on the grounds that it would be unlikely to gain clearance from the Australian Foreign Investment Review Board and US government on national security grounds.

Defence Minister Richard Marles later indicated that the government would probably not block such a transaction.

However Austal, which has remained open to talks, has also insisted a break fee form part of any future due diligence period – a ­request Hanwha has so far rejected. It is also understood Austal’s board takes a view that Hanwha would need to lift its price to ­secure an acquisition.

Austal shares closed at $2.47 on Thursday, well below the $2.825 a share offered by Hanwha earlier this year.

Austal founder John Rothwell will step aside as chairman from July 1.

Any transaction would need the blessing of billionaire investors Andrew and Nicola Forrest, whose Tattarang Ventures owns a 19.6 per cent stake in Austal.

In an investor update last week, Austal CEO Paddy Gregg said the company was hoping to be “materially involved” in the government’s lift in defence shipbuilding as a result of the surface fleet review, which envisages an increase in the conation’s frigate program among other initiatives.

Austal, which has shipbuilding facilities at Henderson, in Perth’s south, as well as in the US, recently announced it had been awarded a $779m contract modification by the US government for the construction of the lead ship in the T-AGOS ocean surveillance program.

Austal was awarded a contract that detailed designs for the ship in May last year, with options under the deal for design and construction for up to seven ships.

Mr Rothwell said Mr Spencer’s in-depth knowledge of the “US defence industrial base” was one of the key reasons for his appointment.

Mr Spencer served as the US secretary of Navy from August 2017 to November 2019, following a career in the US Navy and at several investment banks, including Goldman Sachs and Bear Stearns. He will also join the board of Austal USA, in a move the company said would provide “important linkages between the two boards”.

“The position that Austal has forged in the US and Australian defence sectors in such a short ­period of time is incredible,” Mr Spencer said.

“I have kept a close watch on the company’s progress in the USA. Its expansion from a two shipyard to a multi-program provider, including command deck modules for the United States’ nuclear submarines, has been impressive. Austal’s position in the US and Australian defence industry landscape has been built on a foundation of innovation and commitment to delivering a quality product.”

Over Mr Rothwell’s 37 years at the helm, Austal has grown from a small, privately owned commercial shipbuilder to an international contractor with a multibillion-dollar order book, more than 4000 employees and shipbuilding operations in Australia, the US and Southeast Asia.

Austal this week announced it had secured a $39m order from the federal government for two additional Guardian-class patrol boats, adding to the 22 patrol boats previously ordered under the Pacific Patrol Boat Replacement Project.

Originally published as Austal chairman John Rothwell to step down amid Hanwha takeover battle