The Singapore and Australian bourses on Monday announced a multi-billion dollar merger creating one of the world's largest and most diversified financial trading hubs- and say they're confident of regulatory approval.
Singapore's SGX offered US$8.2b to take over Australia's ASX to create ASX-SGX Ltd, which will be the world's fifth largest listed exchange group, a joint press statement said.
The two exchanges will keep their respective brands but the merger is aimed at maximising the strengths of the resource-rich Australian bourse with Singapore's more international profile and links to the booming China market, AFP reported.
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ASX chief executive Robert Elstone said he was confident of getting regulatory approvals, The Australian reported.
"In a period of profound structural change in financial markets, ASX has carefully considered its strategic options to enhance its future competitiveness," the paper reported him as saying.
Driver of global growth
The bid, expected to be completed in the second quarter of 2011 subject to regulatory approval, values the ASX at 48 Australian dollars a share, a premium of nearly 40 percent on the last traded price
The merger would "enable customers globally to capitalise on listing, trading clearing and settlement opportunities created through the expanded platforms leveraging on the importance of Asia Pacific as the driver of global growth," the statement said,
Magnus Bocker, the SGX chief executive who will become the CEO of the combined group, said the merger would allow investors to ride on Asia's strong economic growth.
"The combination of ASX and SGX offering innovative new products and services to the market will allow customers to maximise future opportunities where Asia Pacific takes centre stage stage globally as the source for capital wealth creation and trading opportunities," he said.
The Wall Street Journal said the merger could create a roughly 1.9 trillion US dollar market.
Hurdles to jump
The deal looks likely to face some regulatory hurdles in Australia as Singapore's government is a major shareholder in SGX.
But Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel did not believe the merger created any anti-competition problems.
"I think it's a matter between the Singapore exchange and the Australian exchange and I can't see that raising competition issues for us," Samuel said, according to public broadcaster ABC.
The announcement comes with the ASX about to lose its long-held monopoly after the government gave the green light for rival share exchanges to operate in Australia.
Reports said the resources-heavy ASX is worth about 1.38 trillion Australian dollars, nearly three times Singapore's valuation of about 560 billion. But SGX is valued at 7.8 billion Australian dollars compared to 6.1 billion for ASX.
Former ASX chairman Maurice Newman said the Australian government should not be concerned as the deal is driven purely by commercial interests.
"They have opportunities to draw in more play from Asia, from China specifically," he told public broadcaster ABC.
"Singapore has a number of China stocks and that opens up for Australian investors direct access which is not currently available."
David Gonski, current chairman of ASX, is expected to become the deputy chairman of the merged entity. Chew Choon Seng, chairman elect of SGX, is likely to become the non-executive chairman.
