Australia may block SGX bid for exchange

Elizabeth Fournier
THE Australian government has said it intends to reject the Singapore Exchange’s proposed $7.8bn (£4.8bn) bid for Australia’s stock exchange, raising concerns that political challenges could harm other exchange tie-ups.

The Singapore Exchange launched its agreed takeover bid for Sydney-based ASX last October, with a view to ward off the threat from alternative trading platforms and cut costs.

But Australian Treasurer Wayne Swan said yesterday he would reject the bid on advice from the Foreign Investment Review Board (FIRB).

“FIRB informed SGX that I had serious concerns about the proposal and that, subject to further consideration, I intended to accept the unanimous FIRB advice that the takeover would not be in the national interest,” he said.

As well as approval from the FIRB, the deal is subject to the Australian government removing legislation that prohibits any one party from owning more than 10 per cent of ASX.

Though Swan said that a final decision had not been made, the markets’ response implied the market doubted the deal could be saved. ASX shares closed down 3.3 per cent, while SGX shares closed 4.5 per cent higher.

Parties involved in ongoing exchange mergers around the world will be watching the deliberations closely, with many also awaiting regulatory clearance of accepted bids. London Stock Exchange’s bid to buy Toronto Stock Exchange operator TMX Group needs to overcome opposition from Canadian banks and the home government in Ontario.