[Splash/ June 21, 2024] South Korean conglomerate Hanwha has sealed a deal to take over Aker-controlled US shipbuilder Philly Shipyard.

Oslo-listed yard said it is selling the business to defence specialist Hanwha Systems and shipbuilder Hanwha Ocean for $100m in cash.

The deal is expected to close in the fourth quarter of this year, and the closing price could be reduced in the event of cost overruns above $100m on current projects, Philly Shipyard said.

Hanwha has been tipped as the potential buyer for some time, amid its intensifying competition with rival HD Hyundai Heavy Industries, which also recently signed a memorandum of understanding with Philly Shipyard on future US government shipbuilding projects after working together on more than 20 product tankers between 2005 and 2017.

Hanwha has also made moves on Australian builder Austal, which has grown to be one of the leading naval suppliers in Australia and the US. The initial offer was rejected due to concerns over regulatory approvals, but local media suggest the South Korean shipbuilder may try again.

Kristian Røkke, chairman of Philly Shipyard, said the deal with Hanwha will enable the shipbuilder to realise “a grander vision for its employees and customers” and that he “eagerly anticipates witnessing the shipyard’s continued growth and success in the future”.

From a financial perspective, Røkke said the combination of $150m in dividends since 2014 and a sales price of $100m, offered shareholders “an attractive value creation journey”.

As of end-March, Philly Shipyard had a backlog of about $1.6bn with last contractual delivery date in 2027. The orderbook consists of four national security multi-mission vessels, one Jones Act-compliant subsea rock installation vessel and three containerships.