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

on Tuesday it had rejected an A$1.02 billion ($662 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 Western 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's ( AUTLF ) shares rose 8.2% in early trade, while the

Australian S&P/ASX200 index was flat.

The firm 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 U.S. 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.

The approvals needed would include Australia's Foreign

Investment Review Board (FIRB), the Committee on Foreign

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

Counterintelligence and Security Agency.

Hanwha Goup is South Korea's seventh-largest conglomerate

with 80 trillion won ($59.11 billion) in assets, spans energy,

defence and financial industries.

It said it was willing to accept all reasonable conditions

to receive FIRB approval and it had been advised by a global law

firm that CFIUS should not object to the deal.

"Austal ( AUTLF ) is a national asset and thus can only be sold to

companies within the AUKUS alliance countries

(US-UK-Australia)," said an Hanwha spokesperson.

"But South Korea maintains a close military cooperation

relationship with the U.S. and Australia, including conducting

numerous joint exercises, as it is an important ally of both

countries."

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 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)

($1 = 1,353.4500 won)