April 2 (Reuters) - Australian shipbuilder Austal ( AUTLF )

said on Tuesday it had rejected an A$1.02 billion

($661.9 million) takeover offer from South Korea's Hanwha Ocean

as it was unlikely to be approved by Australian and

U.S. regulators due to the sensitivity of its operations.

The West Australia-based firm said it had received a bid at

A$2.825 per share, representing a premium of 28.4% to Austal's ( AUTLF )

last closing price.

Austal ( AUTLF ) signed an initial agreement with the Australian

government in November which would see the company being

selected as a strategic shipbuilder.

Austal ( AUTLF ) is also a prime contractor designing, constructing

and sustaining ships for the US Navy.

The company said on Tuesday it thought it was unlikely

Hanwha's bid in its current form would receive approval from

Australian and overseas regulators.

Austal ( AUTLF ) said government approval "is particularly relevant in

relation to the proposal from Hanwha, given Austal's ( AUTLF ) position as

the designer and builder of defence vessels for the Australian

and U.S. navies and ownership clauses associated with defence

contracts."

The approvals needed would include Australia's Foreign

Investment Review Board (FIRB), the Committee on Foreign

Investment in the U.S. (CIFIUS) and the U.S. Defense

Counterintelligence and Security Agency.

"The company is open to further engagement if Hanwha is able

to provide certainty on whether a transaction would be

approved," Austal ( AUTLF ) said in a statement.

Austal's ( AUTLF ) market capitalisation before the bid stood at

nearly A$800 million.

($1 = 1.5411 Australian dollars)