Australia announced on Friday that it would not oppose Hanwha's proposal to nearly double the stake of Austal in Australia, but there will be strict conditions regarding data access and security.

Treasurer Jim Chalmers stated that the decision to allow South Korean conglomerate Austal to increase its shareholding from 9.9% to 19.9% would "ensure greater protection for Austal" and uphold Australia’s strategic and sovereignty interests in the company.

Chalmers stated in a press release that the decision was made after a "thorough and robust" process which took into account all relevant economic, national-security and national-interest issues.

It incorporates advice provided by relevant agencies, including the Department of Defence and the Department of Foreign Affairs and Trade.

The financial details of the transaction were not disclosed.

After the government made its decision, trading in Austal shares was suspended on Friday morning.

Chalmers stated that if Hanwha continues, it would be subject to strict criteria regarding the nomination of Austal board members, including restrictions on accessing and storing sensitive information.

Hanwha had previously indicated that it wanted to partner with Austal for shipbuilding projects. It also said that if the proposal was approved, it might seek a position on a board.

Austal issued a statement in which it said that the board would closely examine any opportunities and risks associated with partnership requests and board positions, if they were made.

The decision follows a 'technology and supply chain agreement' signed last month by Austal and the state-owned ASC. ASC is the submarine builder who will build Australia’s fleet of nuclear-powered subs as part of the AUKUS defense pact, which includes Australia, the United States, and Britain. The ruling follows a?technology and supply chain agreement signed last month between Austal and state-owned ASC, the submarine builder that will jointly build Australia's?fleet of nuclear-powered submarines under the AUKUS defence pact between Australia, Britain.

Hanwha announced in June that the U.S. Committee on Foreign Investments (CFIUS), had approved its increase in shareholding to Austal from 19.9% to 19.9%. Austal supplies defense vessels to the United States Navy.

Hanwha with its interests in the energy, defence, and finance industries would remain a minor shareholder in Austal, and be prohibited from increasing its stake beyond 19,9%, Chalmers stated.

(source: Reuters)