Merger

|

Project Avatar: ASX-SGX Failed Merger |

BMA 5318 Investment Banking |

|

Ameya Patkar, Janhavi Anand, Kang Suk Choe, Prabodh Shahi, Zaheed Tejani |

|

|

Contents

Industry Background 1

About ASX 1

About SGX 2

How the ASX-SGX Merger Story Began 2

Motivations behind Merger 3

Deal Structure 5

Approvals Required for Merger 6

Funding of the Deal 7

Immediate effects on Stock price of ASX and SGX 7

Issues concerning the Merger 8

Efforts to push Merger Through 9

Team Opinion: What SGX should have done 10

Blocking and the Reasoning behind it 11

Effects of Blocking the Deal 12

Team Opinion: Why the Deal Failed 13

Conclusion 14

Appendix 15

Bibliography 19

Industry Background

Due to the advancement and integration of financial markets in 2010, the stock market industry had become highly competitive. Global stock exchanges were working more like individual companies with different customers, including firms, financial intermediaries and private and institutional investors. One of the largest drivers of this competition was technology which increased the speed of trading transactions, while also making them more accessible across the globe. Globalization also played another key role in competition, as mergers and acquisitions and cross-border holdings of financial assets increased. At the time ASX defined its main objective as being able to maintain power in the Australasia market listings, while increasing listings in Southeast Asia. SGX tried to position itself in the market by attracting Asian companies, especially private firms found in China, that were not globally recognized then.

About ASX

ASX was a multi-asset class, vertically integrated exchange. Measured by market capitalization it was amongst the top-10 listed exchanges in the world. Its activities included primary and secondary market services, central counterparty risk transfer, and securities settlement for both, equities...