Singapore Exchange's bid for australian rival ASX on the brink of collapse

Singapore Exchange's A$7.6 billion ($7.9 billion) bid for bourse operator ASX is on the brink of collapse after Australia said the takeover was not in the national interest. Australian Treasurer Wayne Swan said the Foreign Investment Review Board advised him against Singapore Exchange’s bid, and that he had "serious concerns" about the proposal. Chief executive Magnus Bocker said the Singapore bourse isn’t considering changes to the bid structure.

"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. "I am still open to further representations or information from the parties before coming to a final decision." Singapore Exchange offered to buy ASX on October 25 in a cash and share deal then valued at A$8.4 billion, a 42% premium to ASX’s share price.

The bid was opposed by several Australian parliamentarians. Pressure on rival exchanges to expand increased in February when Europe’s Deutsche Boerse and NYSE Euronext agreed to merge, and after London Stock Exchange Group said it would buy Canada’s TMX Group.

It is the first proposed foreign merger to be opposed on national interest grounds in Australia since former treasurer Peter Costello blocked a $3.2 billion bid by Royal Dutch Shell in 2001 to take control of Woodside Petroleum. A final ruling on the bourse takeover is expected within days, said Singapore Exchange’s Bocker. ASX shares dropped 3.3% after the announcement on Tuesday , while Singapore Exchange’s shares jumped as much as 6.5%.

"I don’t think SGX or ASX will sit where they are and accept it," said Angus Gluskie, who helps manage $350 million at White Funds Management in Sydney. "It’s one thing for the government to say it’s not in the national interest, but they’ve got to look at it from the company’s position where they’re saying it’s a practical necessity for them to continue operating in a competitive manner."