Stock Exchange merger off

The Australian Stock Exchange has called off its proposed takeover of the New Zealand Stock Exchange and is refusing to give reasons for the decision.

"It was decided not to proceed with the merger, having determined that it would not be possible at this stage to reach a solution which ASX felt would be acceptable to both NZSE members and ASX shareholders," ASX says in a statement.

A spokesman refused to add any more detail to the statement: "We are not adding anything to that (two paragraph) statement," he says.

Meanwhile, NZSE managing director Bill Foster says it was a joint decision to pull the plug on the takeover. He says the deal didn't meet ASX's commercial imperatives, nor did it add value or do anything to develop New Zealand's capital markets.

Price was not a sticking point.

Armstrong Jones chief investment officer David McClatchy said earlier that any deal would have to be earnings per share positive for the ASX, which is a listed company, or be based on getting access to better systems.

Clearly volumes through the NZSE would have been insufficient attraction by themselves so, for a deal to proceed, it would need to be around something like systems.

Finance Minister Michael Cullen says he is personally disappointed that talks to merge the New Zealand and Australian stock exchanges had collapsed.

"I believe merger had a lot to offer New Zealand and hope either that the initiative is revived at some later stage or that other ways are found to capture some of the potential benefits."

Although the takeover deal has fallen through the NZSE is still proceeding with plans to demutualise. The bill enabling the exchange to move from a mutual to a company structure is currently before Parliament's Commerce Select Committee.

Meanwhile, the ASX is about a month away from getting its alliance with the Singapore Stock Exchange up and running, plus it is progressing with plans to link up with the New York Stock Exchange and Nasdaq.

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