Singapore's SGX to pay $8.3b for Australia's ASX

Singapore Exchange (SGX) has agreed to a $8.3 billion takeover of Australia's ASX Ltd to create Asia's fourth-largest stock exchange, aiming to cut costs and fight growing competition.

However, the first major consolidation of Asia-Pacific exchanges faces regulatory hurdles, including getting Australia's Parliament to lift a 15 percent ownership cap on ASX and getting approval from the country's Foreign Investment Review Board (FIRB).

"There are quite a few regulatory hurdles for this, which is why the shares are trading below the notional value of the offer," said Tom Elliott, a managing director at MM&E Capital.

SGX offered a combination of A$22 in cash plus 3.473 of its own shares per ASX share, valuing the Australian operator at A$8.4 billion ($8.3 billion) or A$48 a share.

The companies said they hope to close the deal in the second quarter of next year.

The companies said it will save them $30 million a year in costs and make them more competitive as they face growing pressure from alternative trading platforms.

SGX-ASX will oversee a market worth about $1.9 trillion, ranking it fourth behind Tokyo, Hong Kong and Shanghai among Asian bourses, according to the World Federation of Exchanges.

Chan Ka Keung, secretary for financial services and the treasury of the Hong Kong Special Administrative Region, said the merger of the Singapore and Australian stock exchanges won't affect the Hong Kong stock exchange.

"With a hiking stock market, the Hong Kong stock exchange is the listing platform of the most value that is capable of attracting Chinese mainland companies to be listed in Hong Kong and develop their international business," Chan said.

Citigroup analyst Robert Kong said the deal would be seen as a defensive move, with both companies facing limited domestic growth opportunities.

Source: Global Times