… I think you have already done more than enough to hold down the share price of the Singapore Exchange, ever since you took over the helm, by your ill-advised effort to replicate what you did successfully elsewhere.
But trying to match-make SGX with the Australian Securities Exchange just doesn’t make dollars and sense as far as SGX shareholders are concerned.
Paying $8.6 billion for ASX isn’t the way to go, as the SGX share price has been screaming to you and the world ever since the so-called merger was announced last October.
This is especially when Australian law-makers have been making clear that they don’t welcome the Singaporean groom.
After setting an offer price that’s way over the ASX market price and then conceding further on board seats, my fear — now that the Australian authorities have indicated a “no” ( sample report of this turnof events below)– is that you, Mr Bocker, may be tempted to throw in the family jewels to win approval.
Enough time has been wasted already pursuing a nightmare.
Time to get down to doing the real work — that of running SGX and counting the cost of the ill-advised move trying to reprise your old hurrahs!
If SGX sans ASX is considered too small a fish for you to fry, there is always a way to resolve that.
If that happens, I bet the SGX price will jump for joy again, just like it did today. 👿
ASX counts the cost of politics as merger proposal canned
- From: The Australian
- April 06, 2011 12:00AM
MARKET watchers fear the Australian Securities Exchange may miss out on a wave of international exchange consolidation and predict the group’s shares will slide today, after its proposed $8.4 billion tie-up with Singapore Exchange was all but rejected by the foreign investment regulator and the Treasurer.
In an extraordinary turn of events, Singapore Exchange (SGX) confirmed it was told by the Foreign Investment Review Board that Treasurer Wayne Swan was likely to reject the bid, ahead of the typical 30-day evaluation period for foreign transactions.
SGX chief Magnus Bocker said he was surprised by the decision, “especially by the timing”.
Yet SGX has not withdrawn its application with FIRB and Mr Swan said yesterday he had not made a final decision.
ASX shares are predicted to fall today as market sentiment turned against the deal. They fell $1.15, or 3.3 per cent, to finish at $33.70 on a day the wider market rallied.
The FIRB did not explicitly tell SGX it would knock back the deal, but a statement from Mr Swan’s office indicated the foreign investment regulator had found the transaction would be against the national interest.
“FIRB informed SGX that I had serious concerns about the proposal and that, subject to further consideration, I intended to accept the unanimous FIRB advice that the takeover would not be in the national interest,” Mr Swan said.
While Mr Swan said he had not made a final decision, Mr Bocker said he “had to take very seriously” the indication the deal would probably be knocked back, as the Treasurer “is the ultimate decision-maker”.
Mr Bocker said FIRB had not criticised “in any way” the structure of the deal or asked for amendments.
SGX has already made some governance changes to the deal and said in February the combined board would shrink from 15 to 13 members, with 10 of the directors to come equally from Australia and Singapore.
But sources close to the deal noted the ASX was of the view the transaction would not proceed and SGX could possibly withdraw its offer ahead of any further statement from Mr Swan or FIRB.
“Notwithstanding today’s news, ASX maintains a belief in the desirability of global exchange consolidation,” an ASX spokesman said. Several market analysts said that if the proposed deal did not go ahead, the ASX could be left behind, given exchange consolidation had gathered pace internationally, with the London Stock Exchange making a tilt for Canada’s TMX and NYSE Euronext for Deutsche Boerse.
“In this context, ASX will continue to evaluate strategic growth opportunities, including further dialogue with SGX on other forms of combination and co-operation. I think the fact that it’s been blocked here, at the FIRB level, rather than at the parliamentary level — which we thought would be the biggest stumbling block — was a surprise,” said an analyst.
Typically, the FIRB assesses a transaction on national interest grounds and makes a recommendation that the Treasurer has discretion to override.
FIRB has an initial 30-day assessment period, which is yet to expire as SGX made its formal application on March 11.
The deal also requires parliamentary approval, as there is a 15 per cent single shareholder cap on the ASX.
SGX shareholders were initially cool on the group’s bid for ASX, concerned that it was paying too much. SGX shares closed S34c higher at $S8.35 yesterday.