Aussies show confidence in their market

TSX / LSE Merger Part 16

News Item: Australia’s foreign-investment regulator believes the proposed exchange merger isn’t in the national interest.

The proposed Australia / Singapore exchange merger has created more of a political buzz in Australia than we’ve seen here in Canada with the TSX/LSE proposal, but today’s news should matter to our politicians nonetheless.

According to Dow Jones (via WSJ):

Treasurer Wayne Swan said he hasn’t rejected the offer but said the country’s foreign-investment watchdog has “serious concerns” about the proposed purchase by the Singapore Exchange, or SGX. Australia’s Foreign Investment Review Board is responsible for reviewing the deal.

“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,” said Mr. Swan. “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.”

I’ve yet to see the report from the Select Committee at Queen’s Park, and the hearings at the Ontario Securities Commission have not begun, but the advice of the Australian regulator shouldn’t be ignored. The issues being discussed in that country are no different than what’s at stake here in Canada. Our economy is larger than down under, as is our stock market, and yet the academic proponents of the TSX/LSE merger are trying to use “we’ll be left behind” scare tactics to get the deal over the finish line.

One should take today’s news as a sign that Australia’s foreign takeover regulator is confident in the strength of their marketplace, their listed firms, and the talents of the local investment banking community.

Let’s not forget, as was reported back in February (see prior post “Is the LSE the only game in town?” Feb 16-11), Singapore Exchange’s bid for the ASX valued it at 19.5x EBIT, almost twice as much as the 10.4x involved in LSE’s bid for TMX Group.

Proving that the Aussies cannot be bought.

MRM