The Singapore Exchange’s S$10.7 billion takeover bid for Australia’s ASX Limited faces a difficult road ahead amid political backlash in Australia and shareholder reservations over the deal.
For the transaction to push through, the Australian parliament, currently controlled by a coalition led by the ruling Labour party, would need to lift the 15 percent ownership cap on the ASX bourse. The Australian Treasury could grant a waiver, but the Business Times reports that this could be stymied if any party demands a vote.
Bob Brown of the Greens Party, a key Labour ally, said he was not supportive of the deal given Singapore’s human rights record and the city-state’s execution of an Australian drug smuggler in 2005.
“This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,” he was quoted in a report by the Associated Press. A few other lawmakers also indicated they were inclined to oppose the takeover.
Aside from regulatory approvals, the merger of the two exchanges will also be subject to shareholders’ approvals. But, already, one SGX shareholder has expressed a negative view over the issue.
Under the deal, SGX will issue new shares and pay ASX shareholders a combination of A$22 or S$28.04 in cash and 3.473 new ordinary SGX shares for each existing ASX ordinary share or equivalent to A$48 per share.
Atsushi Saito, chief executive of the Tokyo Stock Exchange (TSE), was quoted by the Financial Times as saying that the transaction could result in a loss for the Japanese exchange, which is SGX’s second largest shareholder with a 4.9 percent stake. He told the UK paper that if the deal were to push through it would not be “a good story” for Tokyo.
Some analysts said the planned acquisition looked expensive. Gabriel Yap, executive chairman of investment firm GCP Global, said the price of A$48 per share “is too high” as it represents 25 times price-to-earnings ratio while the estimated cost synergies and savings at 20% is higher than that achieved in other mergers and takeovers of other exchanges before.
From the point of view of ASX shareholders, “Christmas has come early,” said Yap.
The SGX-ASX deal aims to create the fifth-largest exchange in the world with a market capitalisation of more than US$12.3 billion and to capitalise on opportunities for growth in Asia-Pacific.The press statement on the proposed merger enumerates other benefits.
What are your thoughts about the deal? Read more at http://sg.yfittopostblog.com/2010/10/27/controversy-grows-over-sgxs-takeover-bid-for-asx/
For the transaction to push through, the Australian parliament, currently controlled by a coalition led by the ruling Labour party, would need to lift the 15 percent ownership cap on the ASX bourse. The Australian Treasury could grant a waiver, but the Business Times reports that this could be stymied if any party demands a vote.
Bob Brown of the Greens Party, a key Labour ally, said he was not supportive of the deal given Singapore’s human rights record and the city-state’s execution of an Australian drug smuggler in 2005.
“This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,” he was quoted in a report by the Associated Press. A few other lawmakers also indicated they were inclined to oppose the takeover.
Aside from regulatory approvals, the merger of the two exchanges will also be subject to shareholders’ approvals. But, already, one SGX shareholder has expressed a negative view over the issue.
Under the deal, SGX will issue new shares and pay ASX shareholders a combination of A$22 or S$28.04 in cash and 3.473 new ordinary SGX shares for each existing ASX ordinary share or equivalent to A$48 per share.
Atsushi Saito, chief executive of the Tokyo Stock Exchange (TSE), was quoted by the Financial Times as saying that the transaction could result in a loss for the Japanese exchange, which is SGX’s second largest shareholder with a 4.9 percent stake. He told the UK paper that if the deal were to push through it would not be “a good story” for Tokyo.
Some analysts said the planned acquisition looked expensive. Gabriel Yap, executive chairman of investment firm GCP Global, said the price of A$48 per share “is too high” as it represents 25 times price-to-earnings ratio while the estimated cost synergies and savings at 20% is higher than that achieved in other mergers and takeovers of other exchanges before.
From the point of view of ASX shareholders, “Christmas has come early,” said Yap.
The SGX-ASX deal aims to create the fifth-largest exchange in the world with a market capitalisation of more than US$12.3 billion and to capitalise on opportunities for growth in Asia-Pacific.The press statement on the proposed merger enumerates other benefits.
What are your thoughts about the deal? Read more at http://sg.yfittopostblog.com/2010/10/27/controversy-grows-over-sgxs-takeover-bid-for-asx/
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