Not a rubber stamp

28 October 2010 By Wei Gu

Whatever the difficulty in gaining Australian approval for buying rival ASX, it might be thought SGX’s own investors will be a rubber stamp. But the Singapore government, the largest, can’t vote; the Tokyo Exchange, the second biggest, is doubtful; and others are nursing losses.

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The Tokyo Stock Exchange has turned from negative to neutral on SGX's acquisition of Australia's ASX after being briefed by the Singapore group, a spokesman said on Oct. 28. He added that TSE, SGX's secondlargest shareholder, will consider the proposal if SGX can come up with a good story.

Atsushi Saito, TSE's chief executive, had previously told reporters on Oct. 26 that, if SGX's merger proposal for Australia's ASX went ahead, it would be "not a good story" for Tokyo. He said it could dilute TSE's shareholding from 4.9 percent to about 3.1 percent, and it was possible TSE would lose "hundreds of millions of yen".

The Singapore government has a 23 percent nonvoting stake in SGX. This would be diluted to 15 percent after the deal. SGX shareholders are expected to vote in March ahead of ASX shareholders in late March, 2011, according to a timetable in the merger implementation agreement.

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