SGX and ASX announce plan for merger

THE Singapore stock exchange (AGX) announced an $8.3bn (£5.2bn) takeover bid for the Australian stock exchange (ASX) yesterday, in an effort to boost its position in the region and compete with Hong Kong.

The new exchange would be the second largest in the Asia Pacific region by number of companies listed, at 2,700 firms from around 20 countries. But the exchange would still lag behind Tokyo, Hong Kong and Shanghai in terms of market value.

The combined company, ASX-SGX, is expected to generate revenues of approximately $1.1bn and earnings in the region of $700m.

ASX and SGX will remain separate with locally regulated entities, and will also maintain their existing brands.

SGX will pay A$22 cash and 3.473 new SGX shares for each ASX share, valuing the ASX at A$8.4bn, or A$48 a share. The deal is pitched at a 37 per cent premium to Friday’s closing price.
However, the deal was received badly by investors in Singapore, where SGX shares closed down six per cent at S$8.950. ASX shares surged 19 per cent to A$41.75 – the biggest rise since November 1998.