Vancouver, B.C., Canada (April 6, 2011) – Clearlease.com Reports Australia signaled Tuesday that it would block the Singapore stock exchange’s $8.3 billion takeover bid for the Australian bourse, saying the deal is not in the national interest.
The move by Australia comes as Canada’s federal and provincial regulators weigh whether to approve a proposed merger of the Toronto Stock Exchange and the London Stock Exchange.
So far, there has not been a groundswell of opposition to the deal — slated to close later this year. But at least three of Canada’s big banks — CIBC, TD and National — have expressed concerns about the transaction.
Other critics have warned it could undermine business and regional interests and put control of Canada’s stock markets in the hands of a foreign buyer.
At Scotiabank’s annual meeting Tuesday in Halifax, CEO Rick Waugh said Australia’s opposition to the stock exchange merger is not necessarily a sign that Canada should follow suit and reject the TSX-LSE merger.
“These are complicated issues, not simple issues and they’re not one liners,” he said after the meeting
“There’s lots of alternatives that I think may satisfy public interest . . . and still bring back those economic benefits that are in the big deal. So I think it’s helpful that they pursue those.”
In Australia, Treasurer Wayne Swan, who has veto powers on major foreign investments in Australia, said the Foreign Investment Review Board had informed the SGX, operator of the Singapore exchange, that he was inclined to reject the deal.
“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,” Swan said in a statement.
SGX made a $8.3 billion cash and shares takeover offer for ASX in October in a bid to become one of Asia’s leading stock markets. The two companies hoped the deal would help them compete as bigger global exchanges join forces.
Nasdaq OMX Group Inc. and another U.S.-based market, the IntercontinentalExchange Inc., have made a joint US$11.3 billion bid for NYSE Euronext, the parent company of the New York Stock Exchange. That raises the possibility of a bidding war with Deutsche Boerse, which agreed a $10 billion deal with NYSE in February.
Swan said he had not made a final decision on the SGX deal.
SGX chief executive Magnus Bocker said the FIRB hadn’t requested any changes to the proposed takeover, and he expects a final decision “within days.”
“We’re surprised,” Bocker said on a conference call with reporters and analysts. “As a combined entity, ASX and SGX would have been the best place to leverage Asia’s growth.”
SGX said it will continue to pursue other growth opportunities including further talks with ASX on other forms of co-operation.
ASX said in statement the company’s board still believes it should participate in “regional and global exchange consolidation” and would continue to evaluate strategic growth opportunities, including other forms of co-operation with SGX.
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