Time shareholders rap SGX execs?

I am delighted to see the Tokyo Stock Exchane rap the knuckles of the executives of the Singapore Exchange and remind them buying the Australian Exchange isn't a do or die affair.

Rather, given the way SGX's share price has collapsed, the merger is a do-n-die move: do it, especially if SGX raises the bid price, and it's a guaranteed one way ticket to oblivion.

For people like me, who bought into SGX at lowish prices, we would just lose our paper profits.

For the TSE, which are sitting on huge paper losses -- its 5% was bought at $10 per share, if I remember correctly -- it will certainly be worse.

Mayb it's time for SGX shareholders to start a ginger group to the tell the still new SGX CEO that enough is enough?



Feb 22, 2011
Singapore bourse shouldn't raise ASX offer, TSE warns



TOKYO - THE Singapore Exchange should not raise its already generous offer to buy Australian bourse operator ASX because that would bring unnaceptable dilution for its shareholders, said the chief executive of the Tokyo Stock Exchange, which owns a 5 per cent stake in the Singapore bourse.

'The offer now looks big, and we can't be happy with the dilution if it is raised further,' Atsushi Saito said at a regular news briefing at the TSE.

SGX faces pressure to sweeten its US$7.9 billion (S$10 billion) offer for the rival Australian bourse to counter opposition to the deal from politicians and win regulatory approval, which requires an agreement to lift a 15 per cent cap on foreign ownership.

This week SGX agreed to allow ASX to have an equal number of directors in the merged company in an attempt to counter calls for the merger to be scrapped. Yet, under the agreement SGX will still own a 64 per cent share after the merger.

Giving ground on that ratio risks turning some shareholders such as the TSE, which up to now supported the union, into opponents of the merger, which if strong enough could scuttle the first major bid at consolidation by major Asia-Pacific exchanges.

That could leave Asia lagging as bourses in Europe and the United States move ahead with new alliances and mergers. -- REUTERS

It's a baaaaad thing: SGX offer for ASX

as Suze Orman, internationally acclaimed personal finance expert, will say.


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!