CANBERRA, March 22 Australia's parliament is likely to hold an inquiry into the Singapore Exchange's $7.5 billion bid for the Australian Stock Exchange , which could further delay any conclusion of the deal until July.
Key opposition lawmaker Barnaby Joyce told the upper house Senate on Tuesday that the opposition would support a Senate inquiry if the deal was approved by the Foreign Investment Review Board (FIRB) and Treasurer Wayne Swan.
Independent lawmaker Nick Xenophon had asked the Senate to set up an inquiry on Tuesday, but his motion was lost after Joyce said an inquiry would be better held after the FIRB process.
"At this point in time, we will not be supporting this inquiry. But we put it on notice that in a future time, which we envisage will be in the next four weeks or so, we will - unless Mr Swan does the bleeding obvious and stops this going forward," Joyce told the Senate.
Xenophon wants the inquiry to examine whether the deal is in Australia's national interest, if it would have an impact on Australia's ability to attract investment, and to look at the role of the Singapore government in the proposed merged entity.
The deal needs approval of the FIRB and then Swan, who must rule whether the merger is in Australia's national interest. The deal also needs parliament to approve the removal of a 15 percent ownership cap on the ASX.
Xenophon proposed the inquiry report back by June 30, which would mean the Senate could not endorse any change to the ASX ownership cap before July.
While the inquiry's findings will not be binding on the government, the results could have a significant influence on how non-government senators will vote on the issue.
Joyce, who is Senate leader of the junior opposition National Party, stepped up his opposition to the deal on Tuesday, warning that merchant banks and broking firms would follow the ASX to Singapore if the deal went ahead.
"If the stock exchange goes to Singapore, how long do you intend to wait before the merchant banks go there, or the stock brokers go there, or a large section of the commerce of our nation floats overseas?" Joyce told reporters.
The deal was first announced in October, but SGX said it made its submission to FIRB on March 11, after bowing to political pressure by agreeing to give ASX an equal number of directors in the merged group.
But the Sydney Morning Herald newspaper, quoting a senior government source, has said if FIRB did not block the deal, Swan would oppose it.
However Swan on Monday said he would not be swayed by politics and said the reports were speculation.
ASX shares are now trading 21 percent below SGX's offer price, with investors worried a deal will not go through. The stock, which fell 2.5 percent on Monday, recovered on Tuesday to close up 0.5 percent to A$34.36. (Reporting by James Grubel; Editing by Ed Davies)