Australian lawmakers oppose SGX, ASX merger

Singapore Exchange Limited's (SGX) proposed $8.2-billion takeover of Australian Securities Exchange Ltd (ASX) is facing opposition in Australia after the country's lawmaker's critisised and signaled that they would torpedo the deal in national interest.

The proposed merger to create the world's fifth-largest stock exchange company by market value came under criticism as many opposition MPs said that the merger would give the government of Singapore with poor human rights record too much control of the Sydney-based exchange.

SGX had yesterday proposed to acquire ASX for $8.2 billion in a cash and stock transaction, a premium of 37.3 per cent in order to create Asia Pacific's pre-eminent exchange group. (See: Singapore Exchange offers $8.2 billion for Australian Securities Exchange) http://www.domain-b.com/investments/world_markets/20101025_securities_oneView.html

Under Australian company's law, no single shareholder can own more than 15 per cent of ASX. Any proposal to hike that threshold would require it being tabled for 15 days before the parliament for approval or blocking the motion.

The proposed merger would also require the approval by several regulatory agencies like The Foreign Investment Review Board, the Australian Securities and Investments Commission, the Reserve Bank, the Australian Competition and Consumer Commission as well as the Australian parliament, where Prime Minister Julia Gillard has a wafer-thin majority hinging on the support from two independents and the Greens Party.

In reminiscent of the widespread anger by lawmakers last year spearheaded by the Greens Party against China's Aluminum Corp of China's proposed $19.5-billion investment in Rio Tinto Group, Greens leader Bob Brown said that Singapore's poor human rights record is a good enough reason to reject the merger.