Austal Limited (ASX: ASB) shares are edging higher in midday trading. Having entered a trading halt prior to today's market open, the company's shares are now back trading and have edged 1.29% higher to $2.36. For comparison, the S&P/ASX 200 Index (ASX: XJO) is currently 0.4% lower.
Today's developments come after an Australian diplomat said the company was on the verge of acquiring a major shipbuilding facility.
Let's take a closer look at today's news.
Why the Austal share price is in focus
Investors have been keeping an eye on the Austal share price after it resumed trading around an hour after the market's open. In comments to local media, as reported by the Australian Broadcasting Corporation, the Australian ambassador to the Philippines, Steven Robinson, said Austal was on the verge of completing the takeover of the Hanjin shipyard in Subic Bay.
"I'm hopeful that there will be some progress made in the next month or two that [will] see a finalisation of all those negotiations," Ambassador Robinson said on Monday about the takeover.
"It's still kind of commercially in confidence so I can't get too much into the details, but nevertheless, let's hope that there's a positive outcome, which will see Austal expand further here in the Philippines," he added.
Subic Bay, on the island of Luzon, is located on the geopolitically important South China Sea. Tensions between the Philippines and China have ratcheted up in recent days, with the Philippines Foreign Minister asking Chinese ships to leave the disputed zone.
At the same time as rumours circulate around Austal's investment in the Philippines, the company is divesting from its Chinese enterprises.
Austal responds
In response to media speculation, and in light of the ambassador's comments, Austal released a statement to the ASX. In it, Austal said its position on the Hanjin shipyard has not changed since August 2019.
"There is no certainty that any additional expansion opportunities will be either pursued or completed," the statement said.
In the statement, Austal also said its investors should be "well aware of the Company's strategy to move into steel shipbuilding…"
Austal share price snapshot
Over the past 12 months, Austal shares have fallen in value by around 18%. Since the beginning of the year, they have also fallen by around 13%.
Given the current Austal share price, the company has a market capitalisation of $837.8 million.
