Singapore Exchange's ASX Bid Suffers Setback as Key Lawmakers Oppose Sale
Australian Greens member Adam Bandt, the National Party of Australia’s Tony Crook and independent Andrew Wilkie today joined independent Bob Katter in opposing the proposed tie-up between Asia’s fifth- and eighth-largest bourses. That means Singapore Exchange, part owned by the city-state’s government, needs the support of the minority Labor government, which hasn’t decided its stance on the deal, and at least four other legislators in the lower house of parliament to approve the deal.
“I would not support any move to sell the Australian Stock Exchange to Singapore or to interests in Singapore,” Wilkie told reporters in Canberra today. “The Australian Stock Exchange is just too fundamentally important to our economy and to our sovereignty.”
The Foreign Investment Review Board will assess the merger and has as many as 120 days to make a recommendation to Treasurer Wayne Swan. ASX will brief Joe Hockey, the opposition Liberal Party of Australia’s Treasury spokesman, on the proposed merger tomorrow, he said in a statement.
The value of Singapore Exchange’s cash-and-stock offer for its Australian rival was the equivalent of A$46.23 for each ASX share, or a total of A$8.1 billion, based on closing prices in Singapore yesterday.
Singapore Exchange shares rose 0.7 percent to S$8.90 at 3:05 p.m. in the city state. The stock is down 6.6 percent since the proposal was first announced on Oct. 25. ASX stock rose 1.5 percent to A$37.86 in Sydney, below the value of the takeover bid.
“The view of the nationalists is that the ASX is the lifeblood of the Australian financial system, and that now it could become a regional hub of Asia,” said Chris Weston, a Melbourne-based institutional dealer at IG Markets. “To me, it’s just an exchange. You want the financial system to be as competitive as possible and as streamlined as possible, and to offer the best technology and best products. It has a lot to do with national pride right now.”
ASX looks forward to discussing the merger proposal with “legitimate stakeholders,” said Matthew Gibbs, a spokesman for the bourse. Magdalyn Liew, a spokeswoman for SGX, wasn’t immediately available to comment.
To approve the takeover, Swan would need to introduce a regulation to Parliament lifting the 15 percent ownership cap on the ASX stipulated in Australia’s Corporations Act.
Katter’s Blocking Motion
“I think it would be a mistake to sell the Australian stock exchange,” Tony Crook, a member of the Western Australian Nationals who calls himself an independent, told reporters in Canberra. “We are of a mind to sell everything of late. I think the Australian stock exchange is fundamentally Australian and it should stay here.”
Independent member Katter today listed a motion for Parliament to block any deal that would see majority foreign ownership of the ASX, saying it would be “lunacy to give regulatory functions to a foreign country.” The motion is scheduled to be debated for two weeks starting Nov. 15, ahead of any consideration on the Singapore Exchange merger.
The proposed merger will face scrutiny from foreign investment regulators, the Reserve Bank of Australia and the Australian Securities and Investments Commission, Swan said yesterday.
“Decisions that I take are decisions that maximize the economic prosperity,” Swan told reporters in Canberra. “The Foreign Investment Review Board will talk to other regulators and I will make a decision.”
Prime Minister Julia Gillard’s Labor government faces uncertainty because it doesn’t hold a majority in the lower house as the result of an election on Aug. 21 that delivered the closest result in 70 years.
It’s not in Australia’s national interest “to have our stock exchange part owned by the Singapore government,” the Greens’ Bandt told reporters in Canberra.
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