Messy end to merger talks strains transtasman relations

Friday 2nd March 2001

THE COLLAPSE OF MERGER TALKS IS HARDLY THE END OF THE WORLD FOR INVESTORS

By Nicholas Bryant

Relations between the Australian and New Zealand Stock Exchanges were at an all time low yesterday after the ASX ignored an agreed timetable to announce the collapse of merger talks.

In a challenging move the ASX jumped the gun by releasing the information last Thursday rather than waiting to put out a joint statement this week which both had agreed on.

It is believed the ASX wanted to separate the bad news about the merger talks from the good news it released in its interim results on Wednesday - net profit up 18% to $A27.1 million for the six months to December.

It will distribute a fully franked dividend of A26.8c a share, up from A24.3c on the same period a year ago.

NZSE chairman Simon Allen refused to comment on how merger talks with the Australians ended, other than saying the only deal likely was a straight takeover of the NZSE by the ASX.

But the ASX's attitude to the future for our capital market seems to have ruffled some feathers.

"The ASX was earnings per share-driven rather than capital markets-driven. That's no better illustrated than their pre-emptive announcement last week that the merger was off after having agreed to make a joint statement this week," a source close to the NZSE board said.

"Throughout negotiations they wouldn't make any commitments in writing on supporting the broad concept of the New Zealand capital market."

ASX managing director Richard Humphrey said, "During the second half of the financial year we will continue to implement our longer-term strategy to develop our capabilities as a market service provider through international alliances and broadening our products and services."

The NZSE will now be watching the ASX's two new functions - one-way trading with the US and two-way trading with Singapore.

The NZSE said similar trading arrangements were the likely way ahead for it too, though it admitted setting them up would be costly. But after the merger talks broke down some members feel they are better off alone and focusing on demutualisation.

The ASX recently began trading in 70 US companies' shares on the Nasdaq and 40 on the NYSE.

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