Equitist wrote on Oct 24^th, 2010 at 8:26pm:


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There does seem to be some credibility to that report, as per the following out of Bllomberg.

I would suggest there may be quite a "few hurdles" to overcome, before any such deal was finally consummated.

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Singapore Exchange Said to Plan $8.2 Billion ASX Bid

Oct. 24 (Bloomberg) -- Singapore Exchange Ltd. plans to offer about A$8.4 billion ($8.2 billion) in cash and stock to buy ASX Ltd., which runs the Australian stock exchange, said two people familiar with the matter.

The operator of Singapore’s exchange will bid A$48 per ASX share and pay 55 percent of the deal in stock and the remainder in cash, said the people, who asked not to be identified before an announcement scheduled for tomorrow. ASX shareholders will receive A$22 cash for each share they hold, they said.

The combination would be the first between two exchange companies in the Asia-Pacific region and will create the area’s first pan-regional stock exchange. The takeover would bolster the global competitiveness of the Singaporean and Australian bourses by lowering costs, allowing new products and increasing the scale of their operations, one of the people said.

After the transaction, the new holding company’s shares will be primarily listed in Singapore with its depository receipts listed in Australia, the people said. Investors will receive 3 1/2 Singapore Exchange shares for each ASX share, one of the people said.

Singapore Exchange will appoint its chairman and chief executive officer to the combined company and ASX will appoint the deputy chairman, one of the people said.

The offer price represents about a 37 percent premium to the last closing price of ASX in Sydney. Trading in shares of both companies was halted on Friday, Oct. 22.

Australia’s stock market is worth about $1.36 trillion, compared with Singapore’s $558.2 billion, according to data compiled by Bloomberg. Even so, Singapore Exchange is the larger company, with a market value of about $7.86 billion, compared with ASX’s $6 billion.

Link -
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aI_Ig3o619w4

I have a bad feeling about this idea - it might impose the worst impacts of globalisation and I am surprised that there has been little apparent interest...

Foreign investment = foreign ownership

In this case, the 'investor' is partially sovereign-owned...

Do we really want a foreign govt to be a part-owner of our Stock Exchange!?

If this goes ahead, the decision cannot be reversed and it will set an important precedent for future transactions...

http://www.theaustralian.com.au/business/industry-sectors/greens-coalition-want-...

Greens, Coalition want proof ASX merger is in Australia's national interest

   * James Massola
   * From: The Australian
   * October 26, 2010 12:41PM

  THE Greens cited Singapore's human rights record today amid mounting concern about a proposed $8.4 billion takeover of the Australian stock exchange.

Both the Greens and the Coalition have demanded the Gillard government prove the planned merger of the ASX with the Singapore Exchange Ltd is in Australia's national interest, considering the large share of the company owned by the Asian state's central bank.

Greens leader Bob Brown today recalled Singapore's 2005 execution of Australian drug trafficker Van Tuong Nguyen as he explained his party's concerns about the takeover, which he also says his party won't support unless it's proven to be in the national interest.

``This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,'' Senator Brown told reporters in Canberra.

* ASX marriage 'perfect' for Chinese market Perth Now, 1 hour ago
   * Regulators eye Singapore sling Herald Sun, 1 hour ago
   * ACCC passes $1.8bn CSR sugar takeover The Australian, 2 hours ago
   * Coalition questions ASX merger The Australian, 3 hours ago
   * ASX's merger hard-sell begins Adelaide Now, 12 hours ago

“(They) don't respect this nation in the way they should, they don't respect our aspiration for a more democratic and fair society, and have a poor track record in regarding Australians as equals.

Senator Brown added: “We don't see an advantage for this nation in having that stock exchange controlled from Singapore, particularly where there is such a big controlling - and I use the word controlling outside the number of shares - interest from the Singaporean authorities.

“The proposal here is that effectively the Australian Stock Exchange in Sydney should be subjugated to Singapore and we will see it whither on the vine and the Greens will not be facilitating or supporting that unless it can be shown to be in the nation's interest,” he said, adding that he did not want it ruled by the “oligarchs” of Singapore.

“We want to know what the impact will be not only on the Australian market and shareholders but also superannuation accounts and financial service and other workers,” he earlier told Dow Jones Newswires.

The ASX merger has to be approved by the Foreign Investment Review Board, but it also has a tougher hurdle to clear.

Because there is legislation governing the ASX, the merger will require a regulation change that could be disallowed by parliament.

Under Australian corporations law, no single shareholder can own more than 15 per cent of the ASX, and any proposal to lift that threshold must be tabled in parliament for 15 days of debate.

That gives members of parliament time to table a disallowance motion that could block the bid if passed.

If the Greens combined with the Coalition, the merger could be scuttled.

Senator Brown's concerns echoed those of Coalition treasury spokesman Joe Hockey, who said: “It is of great concern, unless it can be proven otherwise, that our major regional competitor is buying out our main stock exchange.”

Federal independent Bob Katter, who yesterday called the takeover “lunacy on a grand scale”, said today he intended to table a resolution in parliament to block the takeover.

He said he opposed the takeover on all grounds.

“We will be moving a resolution opposing it,” Mr Katter said. “I would remain very confident all of the crossbenchers will support it.

“I have a desire some things in my country are left owned by my country. I do not wish to live in a country of serfs working for foreign landlords.”

The Gillard government has so far declined to comment on the Singaporean bid.

Senator Brown warned the Greens could open up a broader front in linking trade and human rights.

The party was also concerned about Chinese investment in Australia, he said.

“If Shanghai wants to make a bid, ditto, we would be concerned about that.”

JP Morgan warned today in a note to investors that the ASX deal risks becoming “a heavily politicised issue”.

The chief executives of both the ASX and the SGX said yesterday they want to break down national boundaries and create an Asian-Pacific powerhouse with more than 2700 listed companies from about 20 countries.[url][/url]

Singapore Exchange’s ASX Bid Opposed in Australia

Oct. 26 (Bloomberg) -- Singapore Exchange Ltd.’s A$8.09 billion ($8 billion) bid for ASX Ltd. triggered a backlash from Australian lawmakers, throwing into doubt whether the deal will win parliamentary approval.

The Greens, whose votes Prime Minister Julia Gillard needs to pass legislation, “will not be facilitating or supporting this takeover,” leader Bob Brown told reporters today in Canberra. Opposition treasury spokesman Joe Hockey said the offer is “of great concern” and independent lawmaker Bob Katter called the proposal “lunacy.”

ASX shares fell the most in 20 months in Sydney trading to below the offer price on speculation the plan to create the world’s fifth-biggest listed bourse will be blocked. Singapore Exchange is offering more than twice the average premium of past financial company buyouts in its drive to compete with Hong Kong and Tokyo.

“It will become a political football,” said Anil Hargovan, an associate professor specializing in legal and policy issues at Australian School of Business at the University of New South Wales. “Having a hung parliament won’t help the situation.”

ASX fell 5.7 percent to A$39.39 at 2:45 p.m. in Sydney. SGX shares slumped the most in two years yesterday, reducing the value of the cash and stock bid to A$46.18, according to currency rates at the close of Singapore trading. The stock fell a further 3.1 percent to S$8.67 today on concern the offer is over-priced.

Rating Downgrades
The initial A$48 per-share offer was 41.8 percent higher than ASX’s last closing price before the bid, compared with an average of 21 percent for takeovers of financial companies worldwide in the past year. It’s the third-highest among 15 buyouts valued at more than $1 billion.

JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG. cut their investment ratings on Singapore Exchange, citing regulatory issues, increased debt and ASX’s growth outlook.

The takeover requires an amendment to Corporations law to allow the Singapore-based, state-backed company to own more than 15 percent of ASX, Australia’s treasury department said in an e- mailed statement. The amendment must be tabled in parliament, and lawmakers have 15 days to object, it said.

Regulatory Approvals
Gillard’s minority government relies on the support of the Greens and two independent lawmakers to pass legislation in the lower house of parliament.

The transaction also requires approval from Treasurer Wayne Swan under foreign investment rules and signoff from the Australian Securities & Investments Commission, the Monetary Authority of Singapore and both sets of shareholders.

The opposition will be briefed by the ASX on the merits of the sale this week, a spokesman for Hockey’s office said by phone today. It’s too early to say if the opposition would block the transaction in parliament, the spokesman said.

Singapore Exchange’s largest shareholder is SEL Holdings Pte, which owns a 23.5 percent non-voting stake on behalf of the Financial Sector Development Fund, according to the exchange’s 2010 annual report. That fund is owned by the Monetary Authority of Singapore, the city-state’s central bank, its website shows.

‘Great Concern’
“It is of great concern, unless it can be proven otherwise, that our major regional competitor is buying out our own stock exchange,” Hockey told Australian Broadcasting Corp. radio today. Asked whether there are national interest questions to be answered, Hockey said: “Of course there are.”

“The stock exchange itself would be acting in the best interests of its shareholders, and I can understand that, but it’s up to the treasurer of Australia to act in the best interests of our nation,” he said.

Katter, an independent legislator from the Australian state of Queensland, said the proposal is “lunacy on a grand scale.”

“Soon there will be nothing left in this country that Australians will own,” he said in an e-mailed statement late yesterday.

The reaction by Australian lawmakers is reminiscent of the backlash against China’s Aluminum Corp. of China’s proposed $19.5 billion investment in Rio Tinto Group last year. That deal prompted National Party Senator Barnaby Joyce to appear in television advertisements opposing the deal. Newspapers ran headlines attacking the proposal.

Magnus Bocker, chief executive officer of the Singapore Exchange, and ASX CEO Robert Elstone said yesterday in Sydney that they’re confident the deal will win regulatory approval. The combination is in the national interest of both countries, Elstone said during a media briefing.
Link -
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ac3Wt58_K6SQ
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In the interview with the two CEO's, there was a hint that they wouldn't be there, if it hadn't already be ok'd.

That may have just been wishful thinking or perhaps not, but it seems that sentiment is starting to go against it and it is a buy out, not a merger and rightfully so, it is not in Australia's best interests!

Singapore Exchange’s Bocker Faces Revolt on Australia

Oct. 27 (Bloomberg) -- Magnus Bocker, who stitched together eight European stock exchanges and sold them in a bidding war, is running into a wall with shareholders and politicians over his plan to acquire Australia’s main bourse.

Singapore Exchange Ltd. posted its worst two-day drop in two years after Chief Executive Officer Bocker unveiled an $8 billion takeover of ASX Ltd. this week. Australian Green party leader Bob Brown said he won’t support the bid and Tokyo Stock Exchange Group Inc., with a 5 percent stake in its Singapore rival, warned it will be saddled with losses.

For the 49-year-old marathoner, winning in Asia may prove harder than in Europe, where he combined companies from Lithuania to Iceland to create the region’s fifth-largest exchange. JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG cut ratings on Singapore Exchange yesterday, citing regulation, debt and ASX’s growth outlook.

“There are doubts that the transaction will push through,” said Pearlyn Wong, an investment analyst in Singapore at Bank Julius Baer, which manages about $262 billion in client assets worldwide. “SGX is paying a steep premium for ASX and it’s highly questionable if the synergies from this acquisition will materialize.”

‘National Interest’
ASX shares jumped 19 percent on Oct. 25 but have since fallen 11 percent in the past two days, as political opposition to deal in Australia mounted. Singapore Exchange rose 1.3 percent today, following a two-day, 8.6 percent slump.

Australian Treasurer Wayne Swan said today he will apply a so-called national interest test to the proposal. The Greens’ Brown said yesterday that the deal shouldn’t go through, citing concern that the “national interest” will be hurt, while independent Australian lawmaker Bob Katter called the plan “lunacy.”

“While Bocker has a lot of experience in cross-border deals in Europe and the U.S., this deal will have difficulty getting through because the Australian political landscape has changed,” said Jamie Coutts, sales manager at BGC Partners in Singapore. “Bocker will have to do a lot more marketing and convincing.”

Track Record
“Bocker certainly brings his track record in cementing merger deals,” Coutts said. “The core of every deal is personalities. If the two CEOs have a long-standing relationship, then it obviously enhances the potential for a positive outcome.”

Robert Elstone, the CEO of ASX who has known Bocker for more than a decade, said the Singapore Exchange head has one of the most “successful track records” among exchange CEOs.

Acquisitions often fail to boost value for owners. Shares of more than half the companies that made the biggest purchases in the last mergers-and-acquisitions boom from 2005 to 2008 lagged behind industry peers for two years, according to data compiled by Bloomberg’s ranking group. NYSE shares have tumbled 55 percent since March 2006 as it snapped up companies from Euronext to American Stock Exchange and Archipelago Holdings Inc.

Nasdaq shares lost half their value in 2008 as profit tumbled 39 percent after losses on a currency hedge for its European operations wiped out gains from increased trading. The stock slid 20 percent in 2009 as net income declined 15 percent, according to data compiled by Bloomberg.
Link -
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aPmI2DvFig3M&pos=4
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The criteria here, is about what is in the "national interest" of Australia!

And, the ASX being taken over by another region Asian government, which is trying to compete with Australia in the provision of "financial services", DOES NOT QUALIFY as being in our national interest!