(Recasts lead; adds further comments from ASX, SGX chief executives.) By Rebecca Thurlow and P.R. Venkat Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)--Singapore Exchange Ltd. (S68.SG) said Monday that it is offering A$8.4 billion for all of ASX Ltd. (ASX.AU), the operator of the Australian Securities Exchange, to create the world's fifth largest listed exchange operator.
The deal marks the first move in Asia toward consolidation that has already changed the industry landscape in Europe and the U.S. It will benefit both parties, creating a roughly US$1.9 trillion market that would pose a serious threat to other Asian exchanges in Hong Kong and Tokyo by luring away big fee-paying clients like high-frequency traders and companies seeking to raise capital in a deep, liquid market.
SGX's offer values ASX at A$48 (US$47.11) a share, comprising A$22 in cash and 3.743 SGX shares for each ASX share.
"It is not only the question of creating opportunities, but also staying relevant," SGX Chief Executive Magnus Bocker said.
The combined group, ASX-SGX Ltd., will be listed on both the Singapore and Australian exchanges.
Bocker will be the combined entity's chief executive. Choon Seng, who will become SGX chairman in January, will be the non-executive chairman of ASX-SGX Ltd. David Gonski, currently ASX chairman, will become deputy chairman of ASX-SGX.
SGX's offer is at a 37.3% premium to the last traded price of ASX shares at A$34.96.
SGX shares opened down 5.8% at S$8.99 on the merger news. Analysts said SGX's offer is overpriced while uncertainty remains on whether the deal will clear regulatory hurdles.
"It's overpriced, but sometimes if you want to buy somebody you have to pay a premium, it's just that shareholders may respond negatively," said Asiasons WFG Head of Research Goh Mou Lih.
"The combination of ASX and SGX, offering innovative new products and services to the market, will allow customers to maximize future opportunities, where Asia Pacific takes center stage globally as the source for capital, wealth creation and trading opportunities," Bocker said.
However, the deal would have to clear significant regulatory hurdles, potentially a political backlash in Australia, where foreign ownership of companies is a sensitive issue. Retail shareholders make up about 50% of the ASX register, so public sentiment could be important in whether the government supports the merger.
Under the deal, which remains subject to shareholder approval, ASX and SGX will remain separate legal and locally-regulated entities, and will maintain their existing brands.
The Australian Treasury and the relevant ministers would have to approve the acquisition of more than a 15% stake. The Australian Securities and Investments Commission, which took over regulatory control of stock exchange trading from the ASX recently, would provide a recommendation, but final say would stand with authorities in Canberra.
Both Bocker and ASX Chief Executive Robert Elstone said they were confident of getting regulatory approvals.
If the deal gets shareholder approval, the combination is expected to be implemented in the second quarter of 2011 and would be the second largest listing venue in Asia Pacific with over 2,700 listed companies from over 20 countries and would be the world's second largest base of institutional investors with combined assets under management of over US$2.3 trillion.
Bocker said the combined entity will offer a strong platform for initial public offerings and have a much stronger opportunity to grow the derivatives business.
"We are trying to be ahead of the curve...and staying relevant," Bocker said.
Bocker said SGX has secured a bridge loan. People familiar with the situation said the loan amounts to US$3.5 billion and that SGX will use it to finance the deal.
UBS is acting as financial adviser for ASX and Morgan Stanley is acting as financial adviser for SGX.
-By Rebecca Thurlow and P.R. Venkat, Dow Jones Newswires; 61-3-9292-2093; rebecca.thurlow@dowjones.com
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured article: Beyond Hiroshima - The Non-Reporting of Falluja's Cancer Catastrophe.
No comments:
Post a Comment