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Austal buys Darwin ship service provider
Austal's Armidale class ship in service with the RAN.

WA shipbuilder Austal is expanding its presence in Darwin, buying an engineering firm with significant business supporting Navy and border protection operations and the oil and gas sector.

Austal chief executive Andrew Bellamy said the company would acquire Hydraulink NT and its associated business KM Engineering, merging its Darwin operations with HKME.

It will take an 80 per cent stake for $8 million in cash and equity. Austal will pay a further $2 million subject to the business meeting agreed performance-based conditions.

Mr Bellay said the acquisition signalled Austal’s commitment to supporting RAN and Customs and Border Protection operations which were core to its longterm success.

"With HKME, Austal presents a robust capability tailored to supporting the Austal-built Armidale Class Patrol Boat fleet and the forthcoming Cape Class Patrol Boat fleet,” he said in a statement.

Austal has manufactured the current eight Customs and Border Protection Bay Class vessels as well as the 14 Armidale class patrol boats in service with the Royal Australian Navy.

As well, the company has enjoyed considerable success with foreign orders, with its US subsidiary winning contracts for manufacture of 14 Littoral Combat Ships and Joint High Speed Vessels.

The second of these vessels, USNS Choctaw County, was launched this week.

Mr Bellamy said Darwin was critical to Austal’s longterm strategy of supporting US Navy LCS and JHSV operations.

"We expect to see these vessels in the region and want the Navy to know an experienced, professional and competent team is waiting for them,” he said.

"With HKME, Austal can address the unique logistics, maintenance, training and manning requirements of these ships."

Mr Bellamy said annuity income from service contracts was becoming an increasingly important component of Austal’s revenue, complementing the manufacturing business.

"There is also potential for significant growth as a result of HKME’s relationships with oil and gas sector participants,” he said.

"Resource projects, most notably INPEX’s $33 billion Ichthys LNG development, are forecast to generate considerable demand for our skills both afloat and ashore."

Stuart Kenny, managing director of HKME, will assume the role of general manager Northern Australia had have responsibility for Austal's support business in the region covering Cairns, Darwin and northern WA.