Singapore Exchange Limited (SGX) today revealed plans to acquire Australian Securities Exchange Ltd (ASX), for $8.2 billion in a cash and stock transaction in order to create Asia Pacific's pre-eminent exchange group.

SGX will offer A$22.00 (S$28.04) in cash and 3.473 new ordinary SGX shares for each existing ASX ordinary share, a premium of 37.3 per cent to the last traded price of ASX shares on 22 October 2010, valuing the Australian bourse operator at A$48.00 per share or S$10.7 billion (A$8.4 billion.

SGX, Asia-Pacific's first demutualised and integrated securities and derivatives exchange and ASX were last week reported to be in merger talks, which if successful, would create one of the region's largest bourses with a market value of approximately $ $13.9 billion. (See: Singapore, Australian Stock Exchanges in merger talks)

A new holding company would be formed called ASX-SGX Limited and will be listed on both the Singaporean and Australian exchanges.

The combined group will continue to operate out of Australia and Singapore, maintain their existing brands and will remain as separate legal and locally regulated entities.

Magnus Böcker, currently the CEO of SGX, is expected to become the CEO of the combined group, while David Gonski, currently the chairman of ASX, will become the deputy chairman and Peter Hiom, the current deputy CEO of ASX, will become the CEO of the ASX business of the combined group.

The combined entity will have revenues of about $1.12 billion and earnings before interest and tax of about $711.6 million.

Together ASX and SGX would provide investor's access to the second largest listing venue in Asia Pacific with over 2,700 listed companies from over 20 countries, including over 200 listings from Greater China.

It would also offer the world's widest range of Asia Pacific equity, fixed income and commodity derivatives with over 400 contracts from over 10 countries, including Australia, Greater China, India and Japan, and covering a range of commodities including metals, energy and agricultural products.

The transaction has been unanimously recommended by the boards of directors of both companies but is subject to the approval of shareholders of both SGX and ASX as well as customary approvals.

''We are privileged to partner ASX, which brings to SGX a strong brand, an established business franchise and enriched capabilities. This will be a highly competitive exchange group in an increasingly globalised world,'' said J Y Pillay, chairman of SGX.

''I am delighted to recommend this combination in the knowledge that it presents the opportunity for ASX to play its part in positioning Australia for growth within the region; and at the same time providing its ongoing role for Australian corporate governance and listed company oversight,''  said David Gonski, chairman of ASX.

ASX is gearing up to face competition from new players such as Chi-X which offers high-speed, low-cost alternative trading systems basically to institutional and accredited investors, and is expected to come live in 2011. 

A tie-up between the two exchanges was under speculation in recent months considering the geographic, time-zone and business model similarities between the two regional players.

The proposed combination is in line with the global trend towards consolidation between stock exchanges, in the likes of NYSE Euronext and Nasdaq OMX Group.

SGX had acquired a 5 per cent stake in India's Bombay Stock Exchange in 2007 for $42.7 million, while Tokyo Stock Exchange had bought a 4.99 per cent stake in SGX in the same year for an undisclosed sum.

Sydney-based ASX is Australia's leading stock market with activities spanning primary and secondary market services, and functions as a market operator, clearing house and payments system facilitator.