And I will echo her and more.
Imagine, the Singapore Exchange is going into $4.5 billion worth of debt ( the sum total of what it earned in the past decade since its listing doesn’t amount to anything like this!) and also issuing the equivalent of 60% of its share capital base to buy into an exchange that’s about to lose its monopoly!
Chi-X Global Inc. is expected to gain clearance to form a rival exchange in Australia possibly as early as the first quarter of 2011. That will create a competitor that is likely to eat away at ASX’s trading volumes.
SGX’s takeover attempt reflects a company that has lost its way and is grabbing at seaweed to remain relevant.
And this is what happens when the stock market senses SGX’s panic in the dowry it wants to give to its dowdy Down Under bride.
Players savaged SGX shares today when they resumed trading after the official announcement of the takeover. Down 6% in one day!
With such a huge debt — which needs to be serviced – how is SGX going to continue with its generous dividend payout? Especially when it has 60% more shares to service?
Add that to the huge overhang that materialises when suddenly there are so many more SGX shares available to the market.
And the mauling might well continue unless, unless a rival bidder arrives.
And of cos, that recovery will depend on whether the new bidder will go for the hand of ASX or SGX!
If the former, SGX would be left truly out in the cold, after having served as the agent provocateur in winkling out the bid. And the bidder could well be the Hongkong Stock Exchange – even though today its spokesman Henry Law said:
“HKEx will not pursue alliances, partnerships or other relationships purely for investment gains. HKEx will consider selected opportunities in the areas where it can enhance its capability and strengths in technology, business and services.”
But it is early days yet. And there could be many a slip betwixt the cup and Mr Magnus Bocker’s lips. He could have biten off more than he can chew!
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