SGX bought over ASX.

[Ash007]

Now our stock exchange would be managed by Ho CHING and co!

http://www.smh.com.au/business/singapore-in-84b-asx-takeover-20101025-16zy3.html

Singapore in $8.4b ASX takeover
October 25, 2010 - 1:09PM
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Update The Australian Securities Exchange and Singapore's stock exchange (SGX) have agreed on the first major consolidation of exchanges in the Asia-Pacific, in a takeover valuing the ASX at $8.4 billion.

- The combined bourse will be Asia's second largest
- SGX chief will be CEO, ASX chairman to be deputy chair
- Merger unanimously recommended by both boards
- The ACCC effectively green lights the deal
- Analysts consider the price fair value

The deal values the ASX at $48 per share - amounting to a premium of 37.3 per cent to the $34.96 price the ASX's shares traded at on Friday before news of talks broke.

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ASX shares leapt on the resumption of trade today, surging as much as $8.93, or 26 per cent, to $43.89. Shares of SGX, though, lost 5.8 per cent after its trade resume, easing to $S8.99 before clawing back some of its loss.

In the scheme of arrangement offer, SGX will pay a combination of $22.00 in cash plus 3.473 of its own shares for each ASX share.

"The offer is not near ASX's all-time high, but it is certainly great," said Mark Daniels, head of Australian equities at Aberdeen Asset Management, which owns ASX shares.

Regulator's green light

The deal will need approval from the Foreign Investment Review Board, which could be nervous about the deal as SGX is 23 per cent owned by the Financial Sector Development Fund, which is controlled by Singapore's central bank.

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

''There's FIRB and parliament has to actually approve it. You've got a strange parliament, you've got the rural independents. Nothing would surprise me. It just means this is going to take a while, so there's that uncertainty," Mr Elliott. "(The price) seems pretty fair.''

However, the competition regulator effectively gave the SGX a green light earlier today to pursue the takeover, saying it did not see any major concerns.

The combined market capitalisation of the two groups was about $12.5 billion at October 22. Assets under management at the two exchanges total some $US2.3 trillion ($2.34 trillion), according to a joint release by the two companies.

A marriage of the SGX, Asia's second-biggest listed market, and the ASX, the region's third largest, would mark Asia-Pacific's first major consolidation of exchanges in a move designed partly to ward off the threat of alternative trading systems. Tokyo remains as the region's biggest share market.

"The market will view a SGX-ASX combination as a defensive one, both being exchanges that have relatively mature organic domestic growth opportunities and facing the prospect of losing effective monopoly status with rising pricing pressures as alternative exchanges and trading venues erode share over time," said Robert Kong, an analyst with Citigroup in Hong Kong.

The combined SGX-ASX company would retain a listing in Australia and continue to be locally regulated here.

Singaporeans in charge

Magnus Bocker, chief executive officer of SGX, is anticipated to become the CEO of the combined group.

Chew Choon Seng, SGX chairman-elect, is anticipated to be the non-executive chairman of the combined group, while Mr Gonski, ASX chairman, will be deputy chairman of the combined group. Mr Chew is currently the chief executive officer of Singapore Airlines.

It will have a board of 15 directors from five countries, four of whom will come from the ASX board - David Gonski, Russell Aboud, Jillian Broadbent and Alan Cameron.

ASX CEO Robert Elstone said the merger was unanimously recommended by the boards of each group.

''In a period of profound structural change in financial markets, ASX has carefully considered its strategic options to enhance its future competitiveness,'' he said.

''This combination delivers tangible value today and presents the opportunity for shareholders, customers, employees and other stakeholders to participate in the growth options that this broader based exchange group can make available in the future, whilst preserving strong governance and regulatory oversight in Australia.''

Monopoly ends

The ASX is due to lose its effective domestic monopoly next year, with a new entrant, Europe's Chi-X Australia, expected to begin operation in 2011.

"The price definitely looks full and on a longer-term basis it's fair and in line with what the existing shareholders would like. It's above a lot of the analysts' short-term targets (as well),'' said Angus Gluskie, portfolio manager, White Funds Management (which owns ASX shares). ''

''The risks are definitely regulatory so there's no doubt they have to jump the relevant regulatory hurdles," said Mr Gluskie.

SGX is 23 per cent owned by the Financial Sector Development Fund which is controlled by Singapore's central bank.

Both the ASX and SGX expect necessary shareholder meetings and court proceedings to take place in the first half of 2011, and the merger to be implemented in the second half of the year.

The combined entity will have pro-forma revenues of about $1.12 billion and earnings before interest and tax of about $711.6 million.

The merged entity would provide investors access to over 2700 listed companies from over 20 countries, and the world’s second largest grouping of resources stocks.

It also would include the largest range of Asia Pacific equity, fixed income and commodity derivatives, with more than 400 contracts from over 10 countries.

‘‘The combination leverages the strengths of ASX through its listings, stock options and fixed income franchises, with SGX, the Asian gateway for international listings, equity futures and OTC clearing, to create the regions preeminent exchange group,’’ ASX said in a statement.

BusinessDay, agencies

 

[Ash007]

http://www.smh.com.au/business/goodbye-to-the-regional-financial-hub-20101025-170bc.html?autostart=1

Goodbye to the regional financial hub
October 25, 2010 - 2:41PM
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Singapore in $8.4bn ASX takeover
David Horsfield, CEO of the Stockbrokers Association of Australia, says takeover will deliver some benefits for investors.
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It's not the greatest advertisement for the recovery of Australian equities when the stock exchange itself is happy to be sold for what it was worth back in early 2007. And it says even less about Sydney becoming a regional finance centre when our equity market becomes a branch office of Singapore Inc.

It seems like I've been listening to talk about making Australia a regional finance centre, developing high-value jobs here, ever since our first rush of deregulation in the Hawke-Keating years. Numerous inquiries, recommendations, study tours, conferences and cocktail parties later, the truth is in the reality of the proposed Singaporean takeover of ASX.

Singapore, that little island of five million people, already is the regional equities centre, its SGX stock exchange second only to Tokyo in Asia – and the Tokyo market is primarily a domestic operation.

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ASX, despite a domestic base nearly five times that of Singapore, had already lost any hope it might have had of regional leadership. SGX's strength is in international listings – Australia has remained consumed with its own backyard.

If the takeover is completed, the Australian stock market will ultimately be controlled by Singapore's central bank in another example of the island state's guided capitalism with its long-term goals and patience.

Oh, there's the usual business of maintaining a listing here and regulation by the local authority – ASIC these days – but it would be naïve to think Singapore wants Australia's finance industry to usurp it. Instead, it has just bought the rivers of domestic trading gold that run from our ever-growing compulsory superannuation industry, making SGX stronger for its own further regional ambitions.

After all, SGX is part of an official organ of what effectively is a one-party state where no-one is in any doubt about who is in control. And they have the defamation laws to make sure of that.

We should not be surprised by the ASX acquisition as it's a story repeated even in the sphere where Australia thinks it has a God-endowed destiny: resources.

Australia has the iron ore and gas, but Singapore is the effective capital for servicing the infrastructure, a role in which it again has regional superiority. Examples? Gorgon is a $50 billion project – but most of that money will be spent offshore with Singapore taking a large slice one way or the other. The Australian Workers' Union regularly sends an official to Singapore not to proselytise the locals, but to attend to the some 500 Australian members who are based there. Orica runs its human resources out of Singapore. So it goes.

Australia has become the backyard Singapore didn't naturally have. Perhaps we need the Lee family dynasty's longer-term vision instead of drifting down the American path of only being as good as your last quarterly result.

While the ASX headlines the 37 per cent premium the SGX is paying, that premium is only on Friday's price. ASX started 2008 trading above $60 a share. It was first worth $48 a share in April 2007.

The key local investors seem to be happy with the price the exchange was worth back then. It will provide a nice lift to this quarter's performance for funds managers. And who cares about becoming a regional financial power? Australia doesn't.

Our governments, given their poor track record at picking winners, are no longer game to attempt it. Rolling out the NBN is about as far as any sense of vision extends. Apparently high speed internet is going to make us strong. And in the meantime, instead of seizing the longer-term and greater value-add opportunity of making Australia the regional resources headquarters, we're happy to outsource it to a nation with more drive.

I've long since grown immune to politicians making speeches about the opportunities for a regional finance hub here. They never really meant it, never pursued it with real commitment,but nobody else did either. We haven't had to - the money kept rolling in anyway.

The Johnson inquiry has made yet more recommendations that look like becoming law to make Oz tax competitive for would-be international funds managers, but some cynical part of me suspects those changes are more likely to be used to provide loop holes for tax avoidance than any real drive to develop the industry. It takes more than tax-free status to succeed against more driven competitors and I haven't felt much hunger among our well-fed fundies.

I'm certainly not suggesting anything xenophobic about this takeover. If you don't support the idea of a free market working when it comes to the actual market, you would have to crawl back into protectionist backwaters. It's more a quiet lament that running capital markets is demonstrated to be yet another area where we have no collective ambition to world beaters, or even regional beaters. The ASX's main game now will be to try to remain the best stock market in Australia.

Australia's long-term hope might be to take the takeover a big step further, attempting a back-door listing by seeking automatic dual citizenship for the 22.5 million Australians and those five million Singaporeans. Trouble is, I'm not sure Singapore would want us.

Michael Pascoe is a BusinessDay contributing editor.

 

[n1etzche]

are you scared?? still early days lah

 

[johnny333]

Now our stock exchange would be managed by Ho CHING and co!

Don't worry, if SGX runs the ASX like it does the SGX.

they will be fined by the Aust authorities & sued by the Aust consumers

 

[QXD]

Interesting how this will pan out.

ASX is a publicly owned stock exchange that has no control the clearing house, and the Oz gov is allowing competing bourses to be set up. This is fact is happening now that TOPIX is in talks to set up a 2nd bourse.

SGX OWNS CDP and has been capitalising on that advantage for years, SGX IS a monopoly with no experience in running a pure exchange in competition to another, so they could get screwed over real bad.

As for the retail investor with trading accounts in SG and Oz, be aware that the implication of disclosure to the ATO prior to the merger approval is something to be very wary of.

 

[n1etzche]

Interesting how this will pan out.

ASX is a publicly owned stock exchange that has no control the clearing house, and the Oz gov is allowing competing bourses to be set up. This is fact is happening now that TOPIX is in talks to set up a 2nd bourse.

doesn't asx operate chess? that's the cdp mirror. with regards to the merger, can't people just use a different name

 

[QXD]

I stand corrected, thanks for pointing that out. Perhaps things will change when an alternative bourse is set up.

As for name change, not unless your tax file name is different than that of your SG passport...

doesn't asx operate chess? that's the cdp mirror. with regards to the merger, can't people just use a different name

 

[downgrader]

Singtel buys Optus

SP buys Ausnet

Now SGX buys ASX

Better make use of that huge Aussie land and send about 4.5 million of our 5 million over there to reduce the density here

 

[neddy]

Now our stock exchange would be managed by Ho CHING and co!

Amazing, SGX paid 40% premium for ASX.

As for name change, not unless your tax file name is different than that of your SG passport...

I believe data privacy of ASX customers will be protected.

Singtel buys Optus

SP buys Ausnet

Now SGX buys ASX

Better make use of that huge Aussie land and send about 4.5 million of our 5 million over there to reduce the density here

Seems like Australia is now Singapore's hinterland :-)

 

[Ramseth]

Seems like Australia is now Singapore's hinterland :-)

Seems like they got Christmas Island from Singapore, and Singapore is coming back at them for principal plus interest.

 

[hotbot]

xmas island is an agreement bet aus and sg, why do they need to come back at us for principal and interest. luan luan gong wei.

Seems like they got Christmas Island from Singapore, and Singapore is coming back at them for principal plus interest.

 

[cheekenpie]

I read somewhere that it is better to short SGX and ASX stocks..

 

[Ramseth]

xmas island is an agreement bet aus and sg, why do they need to come back at us for principal and interest. luan luan gong wei.

You must have failed English comprehension. Go read again.

 

[hotbot]

it's an agreement! sg also need not resort to this.

You must have failed English comprehension. Go read again.

 

[Ash007]

Singtel buys Optus

SP buys Ausnet

Now SGX buys ASX

Better make use of that huge Aussie land and send about 4.5 million of our 5 million over there to reduce the density here

In a way I was reminded of the Optus takeover. My friends at Optus hated it after the takeover. Optus, although still considered number 2 in Australia hasn't really offered much in terms of competition. I won't even get into the gripes he had when the Singaporean big wigs comes down and give employees talks about "future" directions.

 

[wrcboi]

In a way I was reminded of the Optus takeover. My friends at Optus hated it after the takeover. Optus, although still considered number 2 in Australia hasn't really offered much in terms of competition. I won't even get into the gripes he had when the Singaporean big wigs comes down and give employees talks about "future" directions.

optus is shit.....i switch to 3 network...its farking expensive....

i always feel proud when my country or related to..bought something or takeover over from some foreigner....

but not proud when its poorly run some horrible people...

love my country but not the people who run it......

 

[n1etzche]

In a way I was reminded of the Optus takeover. My friends at Optus hated it after the takeover. Optus, although still considered number 2 in Australia hasn't really offered much in terms of competition. I won't even get into the gripes he had when the Singaporean big wigs comes down and give employees talks about "future" directions.

singapore inc never intended to compete in au. all economic endeavours were all rent seeking, eg sp ausnet, reits

 

[Ash007]

optus is shit.....i switch to 3 network...its farking expensive....

i always feel proud when my country or related to..bought something or takeover over from some foreigner....

but not proud when its poorly run some horrible people...

love my country but not the people who run it......

Indeed, when Optus took over there was a lot of talk about Singtel having the money to help Optus "takeover" Telstra. Never happened, after my friend told me what happened in Optus, you know why. I would just say, some of the decisions made would work in Singapore, but not in a country like Australia.

 

[cheekenpie]

How come become an optus thread?

 

[Ash007]

How come become an optus thread?

Similarity between the two cases. History repeats itself.