Tuesday, October 26, 2010

What Is the Chance of the NEHTA Chair Providing Much Input and Leadership Over the Next Couple of Months?

Sorry to cross over into the financial domain but this will probably be an important distractor for Mr David Gonski, AC, present Chairman of the ASX and possible future member of the merged board, as far as his focus on NEHTA is concerned.

Here is the report from yesterday:

Singapore in $8.4b ASX takeover

October 25, 2010

Update The Australian Securities Exchange and Singapore's stock exchange (SGX) have agreed on the first major consolidation of exchanges in the Asia-Pacific, in a takeover valuing the ASX at $8.4 billion.

- The combined bourse will be Asia's second largest
- SGX chief will be CEO, ASX chairman to be deputy chair
- Merger unanimously recommended by both boards
- The ACCC effectively green lights the deal
- Analysts consider the price fair value

The deal values the ASX at $48 per share - amounting to a premium of 37.3 per cent to the $34.96 price the ASX's shares traded at on Friday before news of talks broke.

ASX shares leapt on the resumption of trade today, surging as much as 26 per cent, to $43.89, before closing up $6.79 for the day, or 19 per cent, at $41.75. Shares of SGX, though, lost 5.8 per cent after its trade resume, easing to $S8.99 before clawing back some of its loss.

In the scheme of arrangement offer, SGX will pay a combination of $22.00 in cash plus 3.473 of its own shares for each ASX share.

"The offer is not near ASX's all-time high, but it is certainly great," said Mark Daniels, head of Australian equities at Aberdeen Asset Management, which owns ASX shares.

Regulator's green light

The deal will need approval from the Foreign Investment Review Board, which could be nervous about the deal as SGX is 23 per cent owned by the Financial Sector Development Fund, which is controlled by Singapore's central bank.

"There's quite a few regulatory hurdles for this, which is why the shares are trading below the notional value of the offer,'' said Tom Elliott, managing director, MM&E Capital.

''There's FIRB and parliament has to actually approve it. You've got a strange parliament, you've got the rural independents. Nothing would surprise me. It just means this is going to take a while, so there's that uncertainty," Mr Elliott. "(The price) seems pretty fair.''

However, the competition regulator
effectively gave the SGX a green light earlier today to pursue the takeover, saying it did not see any major concerns.

The combined market capitalisation of the two groups was about $12.5 billion at October 22. Assets under management at the two exchanges total some $US2.3 trillion ($2.34 trillion), according to a joint release by the two companies.

Much more here:

http://www.smh.com.au/business/singapore-in-84b-asx-takeover-20101025-16zy3.html

However today it now becomes clear this is not going to happen easily.

ASX takeover faces regulatory hurdles: Swan

Georgina Robinson

October 26, 2010 - 3:23PM

Federal Treasurer Wayne Swan has warned that Singapore Exchange's $8.4 billion takeover of the Australian Securities Exchange still has a number of regulatory hurdles to clear before going ahead, as the Greens and the Coalition voice concerns over the deal.

Mr Swan told parliament today the deal would be scrutinised by the government's Foreign Investment Review Board, which would seek advice from the Australian Securities and Investment Commission and the Reserve Bank of Australia.

Parliament would also need to approve a new regulation allowing a single shareholder to own more than 15 per cent of the ASX, he said.

"The regulatory process ensures that decisions are always taken in Australia's national interest and that the market integrity of the ASX will be preserved," Mr Swan said.

A proposal of this type would be subject to ‘‘extensive regulatory considerations’’ under Australia’s foreign investment policy and the Corporations Act.

"Australia's financial system has performed better than any other during the global financial crisis and of course the ASX is an important part of our financial system's architecture.

"So we will continue to consider all transactions with the objective of carefully and methodically building Australia's reputation as a financial services hub and, as always, we will do this in the national interest."

All the details here:

http://www.smh.com.au/business/asx-takeover-faces-regulatory-hurdles-swan-20101026-171la.html

Given Mr Gonski’s well-known political and management skills I think we can be sure what is going to be keeping him flat out till Christmas at least - unless the politicians just abort it suddenly! (NEHTA hardly compares with an $8.4 billion merger that will need some considerable skill to bring off!)

I think a new interim chair might make sense till this is resolved one way or the other. No offence Mr Gonski but I think you have more than enough on your plate with the ASX!

David.

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