By Michael Smith and Saeed Azhar Michael Smith And Saeed Azhar – Tue Apr 5, 7:54 am ET
SYDNEY/SINGAPORE (Reuters) – Australia intends to reject Singapore Exchange Ltd's (SGXL.SI) proposed $7.8 billion bid for Australia's ASX Ltd (ASX.AX) on national interest grounds, underscoring the political challenges facing other cross-border exchange deals.
The two exchange operators wanted to team up to cut costs, fight growing pressure from alternative trading platforms and avoid being left behind as rivals in North America and Europe get together.
But Australian Treasurer Wayne Swan, facing growing political opposition to the deal, said on Tuesday he intended to reject the bid after getting advice from the country's Foreign Investment Review Board.
"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," Swan said.
A final decision had not been made, he added, but share moves showed the market doubted the deal could be saved. ASX shares closed down 3.3 percent, while SGX shares rose more than 6 percent before closing 4.5 percent higher.
If the deal does fail, it will be the latest in a number of cross-border transactions to fall foul of politicians, including BHP Billiton's (BLT.L) (BHP.AX) $39 billion bid for Canada's Potash Corp (POT.TO) last year.
It could also bode ill for other major exchange deals awaiting approval from regulators and politicians.
Last week, Nasdaq OMX (NDAQ.O) and IntercontinentalExchange (ICE.N) bid $11.3 billion for NYSE Euronext (NYX.N) in an effort to trump Deutsche Boerse's (DB1Gn.DE) deal, and pushed their case with an appeal to U.S. patriotism.
>>Read full report
SYDNEY/SINGAPORE (Reuters) – Australia intends to reject Singapore Exchange Ltd's (SGXL.SI) proposed $7.8 billion bid for Australia's ASX Ltd (ASX.AX) on national interest grounds, underscoring the political challenges facing other cross-border exchange deals.
The two exchange operators wanted to team up to cut costs, fight growing pressure from alternative trading platforms and avoid being left behind as rivals in North America and Europe get together.
But Australian Treasurer Wayne Swan, facing growing political opposition to the deal, said on Tuesday he intended to reject the bid after getting advice from the country's Foreign Investment Review Board.
"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," Swan said.
A final decision had not been made, he added, but share moves showed the market doubted the deal could be saved. ASX shares closed down 3.3 percent, while SGX shares rose more than 6 percent before closing 4.5 percent higher.
If the deal does fail, it will be the latest in a number of cross-border transactions to fall foul of politicians, including BHP Billiton's (BLT.L) (BHP.AX) $39 billion bid for Canada's Potash Corp (POT.TO) last year.
It could also bode ill for other major exchange deals awaiting approval from regulators and politicians.
Last week, Nasdaq OMX (NDAQ.O) and IntercontinentalExchange (ICE.N) bid $11.3 billion for NYSE Euronext (NYX.N) in an effort to trump Deutsche Boerse's (DB1Gn.DE) deal, and pushed their case with an appeal to U.S. patriotism.
>>Read full report
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