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Swan prohibits ASX-SGX merger

Swan prohibits ASX-SGX merger

Treasurer Wayne Swan has formally blocked the acquisition of ASX Limited (ASX:ASX) by Singapore Exchange Limited.

In an announcement on Friday, Swan said he had come to the decision that the deal would be against the national interest.

The purported benefits of the deal have been overstated, he said, and would be inadequate to justify Australia losing economic and regulatory sovereignty over the ASX.

The merger proposal “would need to be substantially and fundamentally altered in order for the national interest to be safeguarded,” Swan said.

The Treasurer made the decision based on what he called “unambiguous and unanimous advice” from the Foreign Investment Review Board, and advice from a number of stakeholders. He used 1975's Foreign Acquisitions and Takeover Act to prohibit the acquisition.

But Swan left the door open for a potential future sale, stating that he has asked financial regulators to consider potential reforms that would give the relevant bodies power to oversee the markets “[even] in the event of a future commercial arrangement between the ASX and another exchange.”

Swan indicated he was considering blocking the merger earlier this week. Singapore Exchange Limited subsequently made another written submission to FIRB about the proposal, without amending the terms.

But Swan said FIRB had considered this response and it had not changed the Board's mind.

In its own statement, the ASX Limited board said they would keep lines open with SGX over some other form of combination or co-operation.

While the board again repeated its belief in the need to participate in exchange consolidation, it said “ASX agrees that Australia's regulators should have appropriate powers to oversee and to act to intervene when risk issues threaten institutes that are central to Australia's financial system.”

The board said it will now start the hunt for a managing director and CEO to replace Robert Elstone, who will leave the role this year.

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Tags Mergers and acquisitionsWayne SwanFIRBASX:ASXSingapore Stock Exchange

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