Australia indicated yesterday that it was poised to use the veto powers of its Foreign Investment Review Board (FIRB) to scupper a A$8.3 billion ($5.3 billion) Singaporean takeover bid for the country’s stock exchange.
The move on the grounds of “national interest” may have global repercussions, analysts said, by further emboldening governments to push a nationalist agenda as regulators step up their scrutiny of foreign takeovers for domestic assets.
Australia’s action has impeded the ambitions of SGX, the operator of the Singapore Exchange, and marks a setback for the plans of its Swedish chief executive, Magnus Bocker, to consolidate bourses in the Asia-Pacific region.
That drive would have started with SGX’s cash-and-share offer for the Australia Stock Exchange (ASX), a deal launched last October.
Wayne Swan, the Australian Treasurer, said yesterday that while a final decision had yet to be made, the FIRB had informed SGX that the deal would probably be rejected because of “serious concerns” relating to the national interest.
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Investors said it was likely that Mr Bocker would turn his attentions elsewhere — a suggestion that he was keen to play down. Brokers began speculating yesterday that SGX might move towards a partnership with the bourse in Hong Kong.
The Australian veto could have implications for the other merger battles being played out in Europe and North America as big exchanges scramble to find the right partners and governments fret over the potential damage to their financial prestige.
Deutsche Boerse’s friendly $10.2 billion (£6.25 billion) bid for NYSE Euronext was last week thrown into confusion by a larger $11.3 billion counterbid from Nasdaq, which overtly played the patriot card to investors. The London Stock Exchange’s bid for the Toronto Stock Exchange operator, TMX, is generating increasing friction with the Government of Ontario where the bourse is based.
Mr Bocker, who has been in charge of SGX for less than 18 months, made his name as the architect of OMX — the Swedish-based bourse that wove together seven Nordic exchanges in a blur of takeovers before being sold to Nasdaq in 2008.
It was clear to investors that Mr Bocker’s appointment at SGX could lead to an aggressive series of mergers in Asia, many of which were likely to run into issues of national pride and political concerns.
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The decision by Mr Swan and the FIRB is the latest example of Canberra rejecting a foreign takeover bid for an Australian company on national interest grounds. These have been mostly in the natural resources sector and been condemned by some as a “protectionist drift”.