Shipbuilders discuss merger

By Graham Davis

Defence contractors Thales, the joint venture owner of ADI Limited, and Tenix have agreed in principle to a proposal to merge the shipbuilding and ship repair capabilities of Tenix and ADI.

The merger move follows the release of the Defence Naval Shipbuilding and Repair Sector plan last year and extensive discussion over the last three years of the need to rationalise the Australian naval shipbuilding industry in the face of reduced demand. The merger proposal would bring together all current naval shipbuilding, upgrade and repair businesses of both companies.

The proposed new company formed from the merger would be majority owned by Tenix.
Full details remain confidential pending talks with the Commonwealth Government and the Defence Department.

If the merger proceeds, ADI Limited’s other joint venture owner, Transfield Holdings, would retain its 50/50 joint venture ownership in the ongoing business operations of ADI.

Once established, the new company could be a potential bidder for the Australian Submarine Corporation, subject to the requirements of the Commonwealth.

The initiative is the first step in creating a long-term and sustainable naval shipbuilding industry, bringing together and enhancing Australia’s significant capability in this stratetgic industry sector.

It would help the long term restructuring of the industry, ensure vital support capabilities are maintained and lead to new investment in capability.

Navy News asked Tenix spokesman Liam Bathgate if the merger plan would have any ramifications relating to the supply to the RAN of a new fleet of patrol boats.

(ADI Limited has submitted a tender to supply fibreglass boats; Tenix has submitted a tender to supply a steel vessel. A third company has also tendered.)

Mr Bathgate said the ramifications were “effectively nil”.

“One will be quarantined from the other. Both will proceed,” he said.

He said should one of the tenders (ADI or Tenix) be the winner, an application would be made to construct the vessel by the new merged company.

Asked when the merger might be finalised he said that Regulators and the Government would have to first sanction the move.

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