Singapore Exchange may offer $8.3 billion for ASX: source

By Saeed Azhar

SINGAPORE (BestGrowthStock) – Singapore Exchange (SGXL.SI: ) is likely to offer as much as A$8.4 billion ($8.3 billion) for Australian bourse operator ASX Ltd, a source said, a move which could mark Asia-Pacific’s first major consolidation of exchanges.

SGX, set to unveil its bid on Monday, will offer as much as A$48 a share to take over ASX in a cash and stock bid, the source with knowledge of the deal told Reuters.

Large global bourse mergers were seen before the financial crisis, including CME Group Inc’s (CME.O: ) 2006 acquisition of CBOT Holdings for $11 billion and NYSE’s (NYX.N: ) Euronext NV buy for $10.2 billion in the same year, according to Thomson Reuters data, which includes debt.

However, Asia did not see full-fledged mergers among bourses in the past and instead saw smaller stake sales such as SGX buying 5 percent of Bombay Stock Exchange.

The source, who declined to be identified because the deal is not public, said around 43 percent of the takeover offer will be in cash with the rest in SGX shares.

“There is a price range being finalized,” the source said. “A$48 is the top of the range.”

At that level, the offer reflects a 37 percent premium over ASX’s last traded price of A$34.96 before shares of both companies were suspended on Friday.

An SGX spokeswoman was not available for comment, but the bourse operator said late on Sunday that it will make an announcement on Monday.

ASX was not immediately available for comment.

Both the Singapore Exchange and the ASX are under pressure to expand and find new business opportunities and counter the threat of alternative trading systems. ASX has also been looking at new business opportunities ahead of the end of its monopoly in 2011.

If combined, the merged entity will have market size of $1.9 trillion, JPMorgan said on Friday, in a report which also stated that SGX CEO Magnus Bocker may run the combined company.

However, JPMorgan analysts cautioned that a full merger between the two entities will face major regulatory scrutiny, as any takeover of ASX would need approval from the Australian government.

SGX is 23 percent owned by the Financial Sector Development Fund which is controlled by the city-state’s central bank.

SGX, Asia’s second-biggest listed bourse, has a market capitalization of around $8 billion, while ASX, which operates Asia’s third-largest listed bourse, was valued at $5.9 billion at the close of trade in Sydney on Friday.

(Reporting by Saeed Azhar; editing by Gunna Dickson)

Singapore Exchange may offer $8.3 billion for ASX: source