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Lack of buyers for exchange merger

By Phil Boeyen, ShareChat Business News Editor

Friday 23rd February 2001

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What started out with a hiss and a roar has ended in a whimper with plans to merge the NZSE and ASX being called off.

Although the NZSE was bullish on the proposition last year, murmurs of discontent among the financial community and the growing realisation of the complexity of the issue appear to have slowly taken their toll.

The ASX, which is a listed company, says the two exchanges decided not to proceed with the merger "having determined that it would not be possible at this stage to reach a solution which ASX felt would be acceptable to both NZSE members and ASX shareholders"

The ASX would have been looking for a deal that would make money for its shareholders, but this could have meant the NZSE shouldering much of the costs of any merger.

Given that the NZSE's members themselves are interested in making money from the process, it appears the two exchanges were unable to come up with a plan that was financially acceptable.

The cancelled merger now leaves the NZSE free to concentrate on its own demutualisation and restructuring.

Chairman Simon Allen says demutualisation was always the Exchange's intention regardless of the outcome of the merger.

"Demutualisation separates the owners from the customers. This will improve accountability and create a better focus on growing the capital market in order to ensure the profitability of the Exchange for its investors".

Mr Allen says listing the business on the NZSE is one option.

"Logically once we have established a more commercial model for the Exchange with a focus on developing the New Zealand Capital Market, then it makes sense to create the opportunity for public participation in the Exchange as a listed company.

"Listing the Exchange would also give a lower cost of capital through access to equity finance and create a better platform of support for a new business plan to grow and service the local capital market".

He says the Exchange needs further investment, particularly in the technology area.

One group of people happy to see the merger cancelled is those behind the 'Stop the Takeover' campaign, which at the end of last year began lobbying against any deal on the basis that it would be bad for the New Zealand economy.

Spokesman Ian Waddell says those who supported the campaign are pleased with the outcome.

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