Here’s embattled agriculture combine Olam on Tuesday morning:
Australia has formally rejected Singapore Exchange’s $8.8bn bid for the country’s bourse, describing the decision as a ‘no-brainer’ for the national interest and financial stability, the FT says. Within minutes of the rejection on Friday, SGX and ASX terminated the proposed deal. In response, SGX said it would continue to pursue organic as well as “other strategic growth opportunities”, including further talks with ASX. The Australian government has cited ASX’s monopoly of the country’s clearing and settlement systems, but faces criticism that the decision has really come down to politics.
Canberra formally rejected Singapore Exchange’s A$8.4bn ($8.8bn) bid for its Australian rival, ruling that the takeover could undermine Australia’s position as a financial centre and the stability of its financial system, reports the FT. In a strong statement, Wayne Swan, the country’s Treasurer, on Friday told reporters it was a “no brainer” that SGX’s bid was not in Australia’s national interest and stressed the ASX’s “critically important” clearing and settlement functions. He also revealed that the Reserve Bank of Australia and securities regulator ASIC had opposed the takeover. Swan was widely criticised after indicating on Tuesday that the government was likely to block the takeover. The WSJ warns that the move “risked damaging the country’s appeal to foreign investors”. Read more
SGX, the Singapore exchange, improved its bid for Australia’s ASX, agreeing to allow more Australian representation on the merged entity’s proposed board in a push to win regulatory clearance for a deal that has raised national interest concerns in Canberra, reports the FT. The two sides hope the concession will boost their chances of being able to form one of the world’s top five exchanges, as a wave of consolidation sweeps the industry in Europe and North America. In a joint statement, the exchanges on Tuesday said the ASX/SGX board’s size would be cut from 15 to 13, with the number of Australian citizens up by one to five. equal to the number of Singaporean citizens. However, SGX will remain firmly in control with the remaining three so-called “international directors” drawn from its ranks and including Magnus Böcker, chief executive. The WSJ meanwhile warns of Australian political opposition to the deal. Read more
Singapore Exchange on Wednesday said it would launch what it claims will be the world’s fastest trading platform on Aug 15, a $195m project called SGX Reach, reports the WSJ. Also, the exchange said, it would eliminate its 90-minute lunch period to give investors a bigger trading window. The news came on the same day that Hong Kong billionaire Li Ka-Shing said his HK-listed company Hutchison Whampoa would make an initial public offering in Singapore of its Chinese ports business, which it hopes will raise as much as $6bn. The exchange normally struggles to attract big China-related IPOs. As part of its expansion push, SGX is pursuing a deal to acquire Australia’s ASX for $8.4bn. Read more
The bid by Singapore Exchange for ASX, operator of Australia’s main bourse, has gained the green light from Australia’s competition regulator, reports Bloomberg. The deal would not adversely affect competition in exchange services, Australia’s ACCC competition watchdog said on Wednesday, after examining whether the acquisition of ASX would deter entry into the Australian market of rival exchange, Chi-X Australia and other competitors due to SGX’s links with Chi-X Global. The deal still needs clearance from Australia’s foreign investment and securities regulators as well as the central bank; also, some law-makers have raised national-interest concerns. Read more
It seemed like such a good idea at the time…
For Magnus Bocker, chief executive of the Singapore Exchange, SGX’s A$8.1bn ($7.9bn) offer for the larger (but less profitable) ASX was the key to his dream of running a powerhouse exchange. Read more
Singapore Exchange posted its worst two-day drop in two years on Tuesday after its CEO Magnus Bocker on Monday unveiled an $8bn takeover of its Australian counterpart ASX, reports Bloomberg. Australian Green party leader Bob Brown said he would not support the bid and Tokyo Stock Exchange Group, SGX’s second-largest shareholder with a 5% stake, warned it would suffer losses from the deal. TSE chief Atsushi Saito told the FT that Japan’s biggest exchange would consider forming international alliances if SGX’s deal proceeds. His remarks highlighted how the proposed shares and cash offer by Singapore’s SGX for ASX has shaken a region with little experience of cross-border exchange consolidation. Read more
Shares in Australia’s stock exchange have tumbled 7.4 per cent after an $8bn takeover bid by Singapore’s bourse was threatened by Australian legislators, Bloomberg reports. Lawmakers in Australia’s sharply divided parliament are able to derail SGX’s bid because it requires an amendment to corporation law that would allow SGX to own more than 15 per cent of ASX. Regulators are also expected to scrutinise closely the Singapore government’s 23.5 per cent stake in the Singapore Exchange, which dwarfs the next largest shareholding of 4.9 per cent, owned by the Tokyo Stock Exchange, the FT says — but notes that officials in both bourses are still confident of a deal. Read more
Regulators are unlikely to block an A$8.4bn ($8.3bn) bid by the Singapore Exchange (SGX) for its Australian counterpart, ASX, despite significant Singapore government involvement, said officials of both bourses, reports the FT. The agreed bid must gain regulatory approval including Canberra’s agreement to lift a 15% cap on foreign ownership. But, notes FT Alphaville, key regulators have signalled a favourable view of the tie-up. The WSJ has doubts, saying the deal is “not only an expensive proposition, it might not even work”. Meanwhile, reports Bloomberg, the deal has ignited bid speculation over other exchanges including HK and Malaysia. Read more
Singapore has taken its ambitious push to become Asia’s investment “gateway” to a whole new level, with a deal by SGX, the main Singapore exchange, to buy Australia’s ASX for A$8.4bn ($8.3bn).
Analysts see the deal as logical and timely, telling the FT that while both exchanges are profitable, neither can grow much beyond their domestic markets by staying independent. Lex meanwhile notes that the two are a ‘decent fit” — particularly as alternative trading venues steadily encroach on the business of the more traditional exchanges. Read more
Shares in SGX, the Singapore exchange, fell nearly 7 per cent after it unveiled an agreed US$8.2bn offer for Australia’s ASX – a deal that would create Asia’s second-largest exchange group, and the fifth largest in the world, reports the FT. ASX shares rose by as much as 25 per cent to A$43.89 on details of SGX’s bid, which values the Australian exchange at A$48 a share. Both bourses have struggled to compete with the rise of alternative platforms and new technology for trading. In particular, the combined SGX-ASX entity will be able to tackle the Australian arrival of electronic trading platform Chi-X in March 2011, and vie with Hong Kong as a global centre for initial public offerings, Bloomberg observes. Read more
SGX, the Singapore exchange, has offered A$8.4bn ($8.2bn) for Australia’s ASX in a deal that would create Asia’s second-largest exchange group, highlighting consolidation pressures amid the growth of electronic trading, reports the FT. Under the deal announced on Monday, SGX would buy the Australian exchange via a scheme of arrangement using a mix of cash and shares. It 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 — a 37% premium to Friday’s closing price. ASX shares were in a trading halt on Monday. The pair are a “decent fit”, says Lex, and both fear the encroachment of alternative trading platforms. Read more
Dark pools of liquidity could be on their way to the Hong Kong mainstream, and one of those pools is potentially being set up in Singapore this year. Is Asia catching up to the US and Europe in this shadowy arena?
Risk magazine has the story on an intriguing arms race in Asian equities innovation: Read more
Tension between exchanges and banks over the role of “dark pools” in the markets trading looks set to spread to Asia after SGX, the Singapore exchange, criticised the banks’ dark pools as “opaque” systems that prevent investors from seeing prices. Sutat Chew, SGX head of market development, said that politicians should distinguish between broker-led and exchange-led dark pools. He spoke as SGX, in joint venture with Chi-X Global, an operator of alternative share trading systems, prepares to launch Asia’s first exchange-backed dark pool. Read more
SGX, the Singapore exchange, is considering clearing over-the- counter derivatives, in the latest sign that exchanges are capitalising on US regulatory pressure to process such financial instruments through clearing houses. The US wants more instruments cleared to safeguard the financial system, insisting last month all “standardised” OTC derivatives be processed through a clearer. The European Commission will address similar issues in a forthcoming report. Read more
In case you missed the Weekend FT, a couple of items worth noting:
- TPG consortium seeks more time for Coles offer
The TPG-led private equity consortium considering a bid for Coles, the Australian retailer, has asked for more time to finalise its offer. TPG, working with Carlyle Group, said Friday night it had requested an extension of the June 29 deadline for bids by a few days while it puts together two financing deals – one for a sole bid and the other for a potential joint offer with Woolworths, Australia’s biggest supermarket chain.
- TSE buys stake in SGX for $303m
The Tokyo Stock Exchange on Friday revealed it had paid Y37.4bn (£153m) for a minority stake in the Singapore Exchange, expanding their existing alliance in another sign of global consolidation among securities and derivatives trading platforms. The groups plan to develop joint equity and interest-rate products, though analysts said the lure for the TSE was SGX’s expertise in futures and clearing services. Read more
The Singapore stock exchange has bought a 5 per cent stake in the Bombay Stock Exchange. This is the third such investment in an Indian bourse, after deals by Deutsche Börse and the New York Stock Exchange. The $42.7m deal represents the first foreign acquisition by SGX, Asia’s third largest listed exchange. The two exchanges said that they would build on SGX’s position as a regional hub for derivatives and international listings, in addition to BSE’s strength in India. Read more