ASX Limited (ASX) and Singapore Exchange (SGX) announced that they have entered into a merger implementation agreement to combine to enable customers globally to capitalise on listing, trading, clearing and settlement opportunities created through the expanded platforms, leveraging on the importance of Asia Pacific as the driver of global growth.
This combination will bring together the complementary businesses of two successful exchanges in the Asian time zone, with internationally recognised regulatory standards. The combination leverages the strengths of ASX through its listings, stock options and fixed income franchises, with SGX, the Asian gateway for international listings, equity futures and OTC clearing, to create the region’s pre-eminent exchange group.
The combined group will augment Australia’s financial market and funds management industry through direct participation in Asian growth, and increase ASX’s and SGX’s competitiveness in a changing global markets landscape. As proven platforms for raising capital and managing price risk for the resource sector, ASX and SGX will build on existing distribution and clearing capabilities, and intend to play an important role in establishing price discovery for global commodities in Asia Pacific.
The combined exchange group, ASX-SGX Limited, will have pro forma revenues of approximately US$1.1 billion and pro forma earnings before interest and income tax of approximately US$700 million, based on the audited financial statements of ASX and SGX, each for the financial year ended 30 June 2010 (“FY2010”).
ASX and SGX will remain separate legal and locally regulated entities, and will maintain their existing brands. This will allow the two exchanges to maintain their existing iconic identities, which are well established in their home markets and internationally, while enabling customers to benefit from cross-market synergies and the greater scale, diversity and broader expertise of the combined group.
Pursuant to a Merger Implementation Agreement (“MIA”) entered into between ASX and SGX, it is proposed that SGX will acquire all the issued ordinary shares in ASX by way of a Scheme of Arrangement (the “Scheme”) under Section 411 of the Australian Corporations Act 2001 (“Corporations Act”). Under the terms of the Scheme, ASX shareholders will be paid a combination of A$22.00 (S$28.04) in cash and 3.473 new ordinary SGX shares for each existing ASX ordinary share (“Scheme Consideration”).
Based on SGX’s last traded price of S$9.54 and using the exchange rate of S$1=A$0.7847, this values ASX at S$10.7 billion (A$8.4 billion) or A$48.00 per ASX share.