And there goes a nice earner for a few members on the ASX board who had pushed for the takeover offer from the Singapore Stock Exchange.
It’s dead, if the Singapore Exchange doesn’t substantially improve the offer by making it more attractive (but not in financial terms) to Australian interests.
The listed ASX company told the ASX yesterday that Federal Treasurer Wayne Swan was opposed to the deal, but had not rejected it.
That was after the Treasurer said in a short statement:
"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.
"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.
In a short statement, the ASX took the Treasurer’s comments be a rejection, because it did not say that it would mount further arguments to convince him.
"ASX Limited (ASX) advises that Singapore Exchange Limited (SGX) has today been notified by the Foreign Investment Review Board that the Federal Treasurer, the Honourable Wayne Swan is disposed to the view, under the Foreign Acquisitions and Takeovers Act, that the proposed merger of ASX and SGX should be rejected as contrary to the national interest.
"The ASX Board maintains an ongoing belief in the need for ASX participation in regional and global exchange consolidation.
"This, together with the business logic of the combination proposal announced with SGX on 25 October 2010, resulted in the ASX Board unanimously recommending the ASX-SGX merger proposal to ASX shareholders.
"In this context ASX will continue to evaluate strategic growth opportunities (including further dialogue with SGX on other forms of combination and co-operation).”
The news, released around 3.14 pm, saw the company’s shares fall 3.3%, or $1.15, to $33.70 at the close.
In Singapore, SGX shares jumped 5% at one stage before closing up 4% on the day as local investors took the decision to be to their benefit.
The bid was announced late last October, and saw ASX shares hit a high of $43.89.
The 20% fall has accelerated in recent weeks as the deal became more doubtful.
But the shares have been falling for the best part of the last three months as sentiment in Australia (especially in Canberra and among some big fund managers) turned against the takeover.
Singapore Exchange and the ASX amended the terms of the deal back in February but that didn’t make it more of a merger of equals (actually the ASX is a bigger exchange) with Australian corporate regulation clearly dominant.
The shares kept on falling after those changes were issued on February 15.
The Singapore Exchange said it had been invited to provide further comments to the Foreign Investment Review Board and that it was considering an appropriate response.
It repeated the line in the ASX statement that it intends 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.
There still is time for the deal to be saved, if Singapore wants it to happen by making significant concessions.
And if they can’t sweeten the pot (not by offering more money) by improving the governance and other concerns, then the deal is dead.
Mr Swan has left it open to the Singaporeans to react.
While not an actual decision, the announcement reveals that Mr Swan would have killed the $8.4 billion takeover offer had it emerged from the Foreign Investment Review Board with an approval.
But it probably wouldn’t have made it out of FIRB with the greenlight because the Treasurer’s views would have been made known in the usual bureaucratic fashion.
If the deal is off, the knockback will be the biggest rejection of a foreign bid since former Federal Treasurer Peter Costello rejected the Shell attempt to buy control of Woodside Petroleum 9 years ago.
