Singapore Exchange’s (SGX’s) A$7.8 billion ($7.8 billion) bid for ASX Ltd, operator of Australia’s main bourse, was cleared by the nation’s competition regulator.
The deal wouldn’t adversely affect competition in exchange services, the Australian Competition and Consumer Commission (ACCC) said in a statement today. A key focus of its investigation was whether the acquisition of ASX would deter entry into the Australian market of rival Chi-X Australia Pty and other competitors due to SGX’s links with Chi-X Global Inc, it said.
The ACCC said last month that it intended to undertake a review aimed at scrutinising the transaction’s impact on “the development of competition between exchanges and associated products or services.” The bid still needs clearance from the Foreign Investment Review Board, Reserve Bank of Australia and Australian Securities and Investments Commission, while some lawmakers have raised national-interest concerns.
“The ACCC approval is clearly a necessary ingredient,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty in Sydney. “Nevertheless, the outcome appears to have been expected, with investors more concerned about the other hurdles.”
ASX, SGX ‘pleased’
Singapore Exchange offered to buy ASX on October 25 for A$8.4 billion in a cash-and-shares offer that would create the world’s fifth-largest listed exchange company. Based on SGX’s closing share price yesterday, the value of the deal was A$7.8 billion. ASX shares initially rose as much as 1.4 per cent in Sydney today before closing unchanged at A$38.50. Singapore Exchange closed unchanged at S$8.41 after rising as much as 1.6 per cent.
The ACCC announcement shows “there are no concerns about a lessening of competition,” ASX spokesman Matthew Gibbs said in an e-mail. Both Gibbs and Singapore Exchange spokeswoman Magdalyn Liew said they were “pleased” with the decision.
“ASX and SGX continue to focus on the regulatory process that is well under way,” Liew said in an e-mail. “We are working closely with the regulatory bodies in providing further information that facilitates the process.”
ASX Chief Executive Robert Elstone told reporters when announcing the takeover proposal that it was in the interests of both countries, and that the companies were confident they would win regulators’ approval.
Besides the ACCC clearance, the offer has to be approved by Treasurer Wayne Swan under Australia’s foreign investment rules and amendments to the Corporations Act must pass through the nation’s parliament, led by the minority Labor government of Prime Minister Julia Gillard. The deal will also have to be approved by the Monetary Authority of Singapore.
