Singapore firms Allen & Gledhill and Stamford Law will act as Singapore counsel to the Singapore Exchange (SGX) and the Australian Stock Exchange (ASX) in the US$8.2bn merger that will see the combined entity become the world’s fifth largest stock exchange. 

It has been revealed that negotiations between the two parties were continuing late last night with an announcement to be made at EST 1200 hours this afternoon on both stock exchanges. Clayton Utz and Freehills are advising SGX and the ASX, respectively on Australian law.

The merger will result in a primary listing in Singapore and a secondary listing in Australia. Terms of agreement include SGX delivering a 30% premium for ASX shares to tie up in a secondary listing structure, not dissimilar to the 2001 Singtel-Optus merger. A merger is seen to benefit both sides as Australia seeks to give Australian companies and investors greater access to booming Asian markets and Singapore seeks to give resource-hungry Asian investors easier access to Australian miners and other companies.

Standing in the way of the success of the merger is approval from the Monetary Authority of Singapore and the Federal Government of Australia. In Australia, legislation prevents any single entity owning more than of 15% of the ASX’s stock and in Singapore, the equivalent cap is 5%.

If this merger succeeds, it builds on a trend of consolidation among the world’s exchanges. In 2006, the New York Stock Exchange acquired Euronext, while in 2007 the London Stock Exchange acquired Borsa Italiana. In 2008, Nasdaq and OMX merged and in 2000 OMX unsuccessfully tried to buy the London Stock Exchange.ALB

Other related stories:

• SGX-ASX confirms merger agreement (25 Oct 2010)