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Australian Stock Exchange

By Dan Stratful

Tuesday 24th January 2012

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Australian Stock Exchange (ASX: ASX) operates Australia’s stock market and the proposed merger between the ASX and the Singapore Exchange (SGX) did not proceed last year. This meant that ASX’s share price took a steep correction as the shares were carrying a takeover premium and the shares traded as high as $40 as merger talks progressed.

ASX is one of the world’s top 10 listed exchange groups measured by market capitalisation, however the proposed merger between the ASX and the Singapore Exchange (SGX) was rejected by the Australia’s Federal Treasurer Wayne Swan.

The merger proposal between the two exchanges was always going to be a long and drawn out process and Australian government approval of the merger would be required.

ASX and SGX have since terminated their Merger Implementation Agreement, but ASX has reiterated that its still wants to participate in regional and global stock exchange consolidation, and it will continue to weigh up strategic growth opportunities and other business combinations and agreements with the SGX.

M&A activity always provides shareholders with the opportunity to sell their shares on-market and this is often a good option, particularly on the more complex transactions.

With the merger now off, ASX shares have since lost their takeover premium and have fallen back to a more fundamental valuation. Stock exchange companies do well when equity markets do well, and the outlook for the Australian market remains bright, underpinned by Australia’s robust economy.

Status: HOLD

ASX’s shares today traded at $30.34

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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