THE DISTILLERY: Bourse rebuff

There's only one story this morning for the covey and that's the bid for the ASX from Singapore Inc, (AKA the Singapore Stock Exchange or SGX). Despite Federal Treasurer Wayne Swan denying that the deal is dead, our jotters have assumed it's a dead parrot (shuffled off its mortal coil, is playing dead, and only resting, to misquote a Monty Python skit) and have written accordingly. The commentaries range from indignation from the likes of The Australian Financial Review, to 'told you so' from other columnists. In fact there will be quite a few slings sunk (and even stronger libations) if this corporate love affair ends in tears, as the market is saying it will.
 
The Herald Sun (and other papers) reported this morning: "Shares in the ASX have tumbled to their lowest level in five months as speculation mounts that the takeover proposed by Singapore Exchange faces insurmountable political hurdles. The group's shares fell almost 2 per cent yesterday as analysts warned Singapore Exchange was unlikely to sweeten its offer amid increasing pessimism over the fate of the $8.4 billion takeover. Rumours the takeover bid faced stiff opposition on both sides of politics were unnerving investors, analysts said."
 
Fairfax's Ian Verrender went risk, tsk: "Last October, when media reports of an imminent takeover sent the Australian Securities Exchange stock price soaring, the market operator kept schtum and traders were forced to operate in an information vacuum. Once again, an eerie silence has descended over the market. Three days after the Herald reported the bid was dead in the water and that Treasurer Wayne Swan would kybosh the proposed merger with its Singapore counterpart, the ASX has yet to make any formal announcement. That's despite the ASX share price yesterday sliding 64 cents. So much for continuous disclosure. So much for self-regulation."
 
Meanwhile, The Australian Financial Review said: "The proposed merger of ASX Ltd with its Singapore counterpart was discussed at the FIRB's board meeting in December, despite the exchanges not having formally sought approval for the deal yet." And its Chanticleer columnist opined, somewhat grandly: "Australia's dented reputation as a place to invest would have been further damaged if Treasurer Wayne Swan had not gone public yesterday with a forceful statement reaffirming the role of due process in the government review of the Singapore Exchange takeover of the ASX."
 
And the Fairfax broadsheets also reported that the ACCC's position in the Metcash case in Sydney continues to weaken: "The competition regulator has denied running its Federal Court case to block Metcash's takeover of Franklins on a false basis or breaching its duty to the court by deliberately withholding relevant material. The denial came after the court heard more details of a meeting on December 14 involving two senior executives of Woolworths and seven representatives of the Australian Competition and Consumer Commission, including its chairman, Graeme Samuel. An ACCC file note of the meeting recorded Mr Samuel saying there was ''some possibility'' Woolworths could gain approval for a joint bid for Franklins with the small Queensland grocery wholesaler SPAR Australia if Woolworths was a ''silent private equity partner''." The AFR said: "The government has announced reforms to enable the Australian Competition and Consumer Commission to take action against price signalling and information exchanges and is likely to introduce its price signalling bill this week." Another rich area for the ACCC to stuff up?
 
The Australian's Tim Boreham wrote yesterday: "Investors are now rating the prospect of a union of the ASX and its Singaporean counterpart as only one notch above 'Buckley's and none', although we would still slightly favour the odds of government approval over NSW Labor performing a loaves-and-fishes miracle on Saturday night. ASX shares dived 69 cents (2 per cent) this morning – well below the $34.96 level reached before last year's October 25 merger announcement – in the wake of reports that, if the Foreign Investment Review Board doesn't knock back the deal, then the government (that is, Treasury) will. Punters were less than reassured by Wayne Swan's protest this morning that nothing had been decided: "I will take my decision on the evidence before me, based not only on the recommendation of the Foreign Investment Review Board but a thorough consideration of all the issues in good time,” Sir Humphrey…err…Swan told ABC Radio". Singapore Stock Exchange shares rose, which is a better indicator.
 
And Boreham backed up this morning with a similar offering: "The bold proposal to create a Singtralian regional exchange powerhouse is dead in the water. That's not our view, we wouldn't be so presumptuous, but it's the more relevant assessment of investors, who sent ASX shares tumbling to below their prevailing level before October 25, when the $45-a-share cash-scrip "merger of equals" was announced."
 
Elsewhere on The Australian, Jennifer Hewitt hopped into the story after the paper was left behind by The Sydney Morning Herald on Saturday: "Ignore Wayne Swan's firm denials. The proposed takeover of the Australian Stock Exchange by Singapore Exchange has been receiving political last rites for some time. It's not yet officially dead. And certainly no one is publicly conceding the imminent demise of the original $8 billion deal. But any prospect of a miraculous recovery would require major surgery – and so far, that is not happening."
 
Business Spectator's Stephen Bartholmeusz wrote yesterday: "Wayne Swan is right to hose down suggestions that he has already made up his mind to reject the proposed merger of the Singaporean and Australian stock exchanges. Why would he, when he probably has close to three months to come to a concluded view on the merger? The exchanges tabled their formal application to the Foreign Investment Review Board just over a week ago. FIRB, if it wished, could stretch the timetable for reviewing the deal out to 120 days, or even longer if it asked the parties to re-submit their applications and re-start the lock. Given the sensitivity of the proposal, one would expect FIRB to take as much time as possible to consider the national interest implications of what is effectively a foreign takeover of the dominant exchange." Precisely.
 
The AFR also wrote this morning: "John Borghetti is spoiled for choice when it comes to choosing an Asian carrier to expand Virgin Blue's international network in the region, but the company is said to be far from inking any deal."
 
And a day after The Australian had an 'exclusive interview' with James Packer, the AFR reported: "James Packer's Crown Ltd is expected to blow out the budget for its $1.4 billion casino renovation and expansion as it attempts to claw back VIP market share from competition in Asia and fend off rival Tabcorp at home."
 
The Australian said: "Commercial air-conditioning and refrigeration services provider Hastie Group has shrugged off market concern that it will not meet its financial obligations in spite of delays to finalising its capital raising plans. There were expectations the group would be in a position to launch the $100 million-plus capital raising today after more than a month of negotiations with lenders and advisers. It is thought discussion on the raising has been stalled on price. There were initial hopes of a 15-20 per cent discount to its last closing price of 92.5 cents." 
 
The Australian's John Durie reported yesterday (and again this morning) on the paper's website: "ASIC chief Tony D'Aloisio formally advised staff today for the first time he would not seek a new term as corporate plod when his contract expires in May. The staff notice came in the wake of media reports over the weekend that former investment banker Greg Medcraft will replace D'Aloisio. He will be the first banker to take the post and as such will face criticism that the ASIC chief should be a lawyer. The only other non lawyer to take the post at the helm of ASIC and its predecessor bodies was Adelaide accountant Geoff Lucy. The argument in favour of a lawyer is that final calls on litigation or regulation come down to the person in the chair and if that person isn't a lawyer he or she will be a captive to staff advice."
 
Durie also said today that: "The ASIC appointment is yet to be publicly confirmed by the Treasurer, along with a long line of other key posts, including the Future Fund chair and chief executive. As noted on the weekend, the fund gave the government its recommendation for a replacement for former boss Paul Costello last month. The fund board meets today, and it could be a lively meeting, which given recent publicity about the tenure of the divisive fund chair David Murray."
 
And The Australian's Bryan Frith wrote that: "In purporting to call off its scheme of arrangement takeover of WA iron ore hopeful BC Iron, the Hong Kong-based Regent Pacific is apparently relying on parts of the scheme implementation agreement (SIA) that have not been released to the market. If that is so, then the market is plainly uninformed, with material aspects of the agreement withheld from the market. That is unacceptable. The ASX should therefore inform BC Iron that its statutory continuous disclosure obligations to disclose any material price-sensitive information of which the company is aware overrides any obligation of confidentiality to Regent." 
 
Michael Pascoe had a smile on his dial on smh.com.au yesterday. "Step back a moment and have a look: there's war in North Africa, unrest in parts of the Middle East, the world's third-largest economy has been rocked by a massive earthquake, tsunami and a nuclear power plant failure that threatened to become a catastrophe, never mind sovereign debt issues remaining in much of Europe. Yet most stock markets have only suffered a bit of a correction that many thought was about due anyway. Maybe that which doesn't kill us really does make us strong. Keeping perspective about the relative lack of equity market reaction to so much turmoil has Morgan Stanley chief strategist Gerard Minack optimistic about the months ahead despite all the uncertainty – although the bear is characteristically worried about the end of the year." Isn't that when Santa delivers the magic puddings?
 
And finally, Reuters reported yesterday: "ANZ Bank sees stakes in four lenders in Asia, including banks in China and Indonesia, as crucial for its Asian growth and could lift those stakes to potentially gain control, the head of the bank's Asian operations said today. ANZ unveiled plans last week to generate up to 30 per cent of its profit outside Australia and New Zealand by 2017 as it seeks to grow into a lender along the lines of HSBC and Standard Chartered. "Our plan is very much based on organic growth. We have to deliver that profit on that basis," Alex Thursby, chief executive of ANZ's Asia Pacific, Europe and America operations, told Reuters in an interview. "Doing new deals is not in the plan; taking extra equity in partnerships is."