September 18, 2020

DealBook: Australia Says It Is Set to Reject SGX-ASX Merger

The global wave of stock exchange consolidation has hit a rocky shoal in Australia, setting an ominous example for the enormous mergers currently under review in the United States, Canada and Europe.

The Foreign Investment Review Board of Australia told Singapore Exchange on Tuesday that its application to merge with its rival, the Australian Securities Exchange, would probably be opposed.

Singapore Exchange, or SGX, said it had been informed that Treasurer Wayne Swan was ‘‘disposed to reject the proposed merger between ASX and SGX as contrary to Australia’s national interest.’’

SGX said it would ‘‘consider appropriate responses’’ to the board’s statement, while pursuing ‘‘other strategic growth opportunities.’’

Just what those opportunities might be remained unclear, as the $7.9 billion merger of SGX and ASX seemed to be the easiest way for both to play a larger role in global finance.

‘‘ASX was the most open, the most likely,’’ said Kenneth Ng, an analyst at the Malaysian bank CIMB, referring to possible takeover targets for SGX in the region. ‘‘The rest are too nationalistic.’’

‘‘Of course Hong Kong is the biggest, but that deal is unlikely, given the rivalry between the two cities to build Asian financial centers,’’ he said.

The Australia Securities Exchange said it would ‘‘continue to evaluate strategic growth opportunities (including further dialogue with SGX on other forms of combination and co-operation).’’

A spokesperson for the Australian Treasury declined to comment.

The two exchanges had already modified their deal to appease regulators and overcome political resistance in February, pledging to preserve Australian jobs as well as the country’s presence on a combined company’s board.

But their attempt has so far failed to persuade Mr. Swan, the deputy prime minister and treasurer in a Labor government led by Julia Gillard, who took office last year.

That failure is unlikely to go unnoticed in New York, London, Frankfurt and Toronto — four cities currently in the throes of proposed stock exchange deals.

Deutsche Börse bid for the New York Stock Exchange in February, just days after the London Stock Exchange announced it was in merger talks with TMX Group of Canada.

The proposed SGX-ASX merger, announced last October, reflected the ambitions of SGX’s chief executive, Magnus Böcker, to replicate a previous success at building a regional exchange.

Mr. Böcker led the Scandinavian exchange operator OMX through more than half a dozen deals integrating various national exchanges, until it was acquired by Nasdaq and he was tapped as president of the combined company. He came to SGX in 2009.

ASX shares slipped 1.15 Australian dollars, or 3.3 percent, in Sydney, to 33.70 dollars. SGX shares rose 0.39 Singapore dollars, or 4.9 percent, to 8.40 dollars.

Article source: http://dealbook.nytimes.com/2011/04/05/australia-says-its-set-to-reject-sgx-asx-merger/?partner=rss&emc=rss

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