Australian Federal Treasurer Wayne Swan has signalled he will block the $8.4 billion takeover of stock exchange operator ASX Ltd by its Singapore rival SGX, citing national interest concerns.
The Australian Stock Exchange (ASX) released a short statement saying that Singapore Stock Exchange had been notified by Australia's Foreign Investment Review Board (FIRB) that Mr Swan ''is disposed to the view, under the Foreign Acquisitions and Takeovers Act, that the proposed merger of the ASX and SGX should be rejected as contrary to the national interest''.
ASX shares dropped immediately on the statement, falling $1.20 or 3.4 per cent, to $33.65, while SGX shares slipped 0.5 per cent to $7.97.
Mr Swan emphasised his decision was preliminary and he was still open to further representation on the matter from SGX.
"It is routine for FIRB to advise the applicant of any national interest concerns before a final decision is made - as this is an important part of the process to allow the parties to respond - but obviously I am still open to further representations or information from the parties before coming to a final decision," Mr Swan said in a short statement.
"FIRB informed SGX that I had serious concerns about the proposal and that, subject to further consideration, I intended to accept the unanimous FIRB advice that the takeover would not be in the national interest," he said.
"It's important to note I have not made a final decision, and it would not be appropriate for me to make further public comments on an application that is still under consideration," Mr Swan said.
ASX said it was still keen on pursuing a merger with a global partner.
''The ASX board maintains an ongoing belief in the need for ASX participation in regional and global exchange consolidation,'' ASX said in a statement.
This was the initial motivation for endorsing the ASX-SGX merger proposal to shareholders, it said.
''In this context ASX will continue to evaluate strategic growth opportunities (including further dialogue with SGX on other forms of combination and co-operation),'' ASX said.
SGX said it had been invited to provide further comments to the Foreign Investment Review Board and that it was considering an appropriate response.
The Singapore bourse operator said it intended to pursue strategic growth opportunities including talks with ASX.
"We will continue to pursue organic as well as other strategic growth opportunities, including further dialogue with ASX on other forms of co-operation," SGX said in a statement.
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