A senior partner with Blake Dawson has revealed that the proposed merger between the Singapore Exchange (SGX) and Australian Securities Exchange (ASX) has been doomed for months.
Speaking to Lawyers Weekly, Blake Dawson M&A partner Bill Koeck said the decision of Federal Treasurer Wayne Swan today to officially block the merger was no surprise in the market.
"I have been hearing for a long time that there were some very serious objections to the merger," said Koeck. "People in the market, such as investment bankers, have been writing this off months ago."
Koeck said that many people within the M&A market in Australia were reluctant to voice these concerns due to the powerful lobbying efforts undertaken by representatives of the ASX who supported the merger.
Earlier today (8 April) the Treasurer released a statement saying he had rejected the $8.4 billion merger on the grounds of national interest.
"It is in the national interest for Australia to maintain the ongoing strength and stability of our financial system, and ensure it is well placed to support the Australian economy into the future," said Swan. "It is important that we continue to build Australia's standing as a global financial services centre in Asia to take best advantage of the benefits of our superannuation savings system. I had strong concerns that the proposed acquisition would be contrary to these objectives."
Swan said his decision was made after "long and careful deliberations" and that his decision was based on "unambiguous and unanimous advice" from the Foreign Investment Review Board.
Clayton Utz is acting as the Australian adviser for the SGX, with national M&A head Rod Halstead and corporate partner Karen Evans-Cullen leading. Freehills partner Fiona Gardiner-Hill is acting for the ASX.
The Treasurer said the proposal from the SGX would need to be substantially altered for it to have any hope of gaining government approval in the future.
SGX chief executive Magnus Böcker has previously commented that he would not alter the current offer.
Koeck said "minds differ" about whether this decision would have flow-on effects for the M&A market.
"You can argue that this is a one-off decision from the Government," said Koeck. "But you can argue that a lot of potential foreign companies will see this as an extra level of regulation which could potentially ward them off."
Koeck believes the ASX will attract additional offers from global exchange bodies in the future.