Aussie-SGX deal faces mounting opposition, S'pore's poor democracy record in the spotlight

A mounting political backlash in Australia threatens to scuttle a proposed US$8.3 billion takeover of the country's stock market operator by Singapore Exchange Ltd., with key lawmakers Tuesday saying it would give a foreign government with a poor record on freedom of speech and democratic issues too much control of the Sydney-based exchange.

The concerns add a new dimension to the ambitious plan, amplifying the hurdles it faces if it is to win both regulatory and parliamentary approval. The ruling Labor party has slim control of power with the support of independents and the sole lower house Greens party lawmaker. A protracted debate about the foreign takeover of the exchange's operator, ASX Ltd., could prove damaging.

Singapore Exchange Ltd. made a friendly offer to buy all of ASX Ltd., the operator of the Australian Securities Exchange. Hong Kong bureau chief Peter Stein talks with Asia Pacific finance correspondent Alison Tudor about the possible consolidation.

Greens leader Bob Brown told Dow Jones Newswires he won't back legislative changes to allow the deal to go ahead.

Singapore "is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse," he later told reporters.

"The proposal here is that effectively the Australian stock exchange in Sydney be subjugated to Singapore and we'll see it wither on the vine," he added.

Lawmakers in Canberra will have to approve the deal, which would require a change in Australian regulatory law. Under Australian corporations legislation, no single shareholder can own more than 15% of ASX, and any proposal to lift that threshold must be tabled in parliament for 15 days. That gives members of parliament time to table a motion that could block the bid if passed.

Australia's foreign investment laws also require approval from the Australian Treasurer Wayne Swan, who will take advice from the Foreign Investment Review Board, which has blocked deals in the past.

The growing political opposition to the proposal means the onus is on Prime Minister Julia Gillard and her government to shepherd the takeover through any debate in parliament. Mr. Swan's office has so far avoided commenting directly on the details of the SGX proposal. Ms. Gillard said Tuesday the government considers all foreign investment proposals in the "national interest." - WSJ