CHRISTCHURCH, New Zealand — Despite an initial rejection from Austal, South Korean firm Hanwha Ocean’s bid to buy out the Australian shipbuilder has some analysts pondering the benefits of such deal.

Jennifer Parker, a naval analyst at the National Security College within the Australian National University, told Defense News: “If you think about what Australia is trying to achieve with its continuous shipbuilding, think about the fact that a lack of Australian ownership is not a barrier for being a sovereign defense industrial base, then I think there’s a lot of opportunity.”

Yet one obstacle to a takeover is regulatory approval from authorities like Australia’s Foreign Investment Review Board (FIRB). In an April 2 press release, Austal said it was “not satisfied that these mandatory approvals would be secured.”

Hanwha Executive Vice President David Kim responded: “There is no foundation of the claim that the FIRB would reject Hanwha’s acquisition of the company.” The South Korean company has previously obtained the board’s approval for investments in Australian armored vehicles.

Domestic opportunities certainly abound. Australia’s recent surface combatant fleet review recommended three general-purpose frigates be built overseas and eight in Western Australia. Korea’s FFX-III frigate, which Hanwha Ocean is helping build, is one of four shortlisted designs.

Hanwha’s acquisition of Austal would increase the chances of swaying the competition in favor of that ship design, Parker noted.

Furthermore, announced last November, Austal has a pilot agreement with Australia’s Department of Defence to act as strategic partner in Western Australia. Already, Austal has landing craft and patrol boats in its order book.

Parker highlighted the Korean conglomerate’s desire for a Five Eyes foothold, a reference to the intelligence-sharing club of New Zealand, Australia, Canada, Britain and the United States. “I think that for Hanwha, who wants to get into the Five Eyes market, it sees that the industrial capacity of the U.S., Australia, New Zealand, Canada to build the ships they want is just not there.”

The prize of Austal USA, a supplier of U.S. Navy vessels, presumably enters Hanwha’s calculus, even if this subsidiary has relative autonomy from Austal Australia.

American shipbuilders might be reluctant about a Korean competitor appearing, but Parker wondered whether the U.S. should not be leaning more on South Korea for assistance in producing ships. “We know the U.S. industrial base is struggling to produce ships and submarines … so there’s opportunity there,” she argued.

Parker highlighted different ideas over what “sovereign” actually means when it comes to serving the Australian market. According to the government’s “Defence Industry Development Strategy,” released in February, Australian ownership is not critical to sovereignty. Apart from the public optics of a 36-year-old Australian company being sold, Parker said, “I can’t right now see any significant disadvantage to it.”

Additionally, it could signal to China that Australia is serious about relations with regional partners.

Leaving the door ajar, Austal said it “is open to further engagement if Hanwha is able to provide certainty on whether a transaction would be approved.”

Gordon Arthur is an Asia correspondent for Defense News. After a 20-year stint working in Hong Kong, he now resides in New Zealand. He has attended military exercises and defense exhibitions in about 20 countries around the Asia-Pacific region.

More In Asia Pacific