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Regulator Approves Merger of Japan’s Biggest Bourses

July 04, 2012

Japanese regulators approved a merger between the nation’s two biggest stock exchanges, paving the way for the first tie-up of major bourses after $32 billion of global deals failed since last February.

The merger is not expected to substantially restrain competition, Japan Fair Trade Commission said in a statement today. Tokyo Stock Exchange Group Inc. will proceed with its 480,000 yen-per-share takeover of Osaka Securities Exchange Co., aimed at completing the tie-up on Jan. 1, the bourses said.

“Considering the international competition in the industry, it was appropriate for the regulator to approve this,” said Sadakazu Osaki, head of research at Nomura Research Institute Ltd. in Tokyo.

The deal was cleared six months after the regulator began its review on Jan. 4. The commission last year streamlined rules to increase transparency, speed decision-making, and clarify merger and acquisition guidelines. It emphasized that a geographical market can be defined as worldwide or regional, not just Japanese, in judging whether a company would have a monopoly.

TSE’s bid, which values the Osaka bourse at 129.6 billion yen ($1.6 billion), would create the world’s third-largest exchange based on turnover, according to data compiled by Deutsche Bank AG.

Failed Deals

Global regulators scuttled $32 billion in exchange takeovers since Singapore Exchange Ltd. (SGX) made a bid for ASX Ltd. (ASX) in October 2010 amid calls from the Australian public to maintain domestic control of stock trading, according to data compiled by Bloomberg. Hong Kong Exchanges & Clearing Ltd. (388), Asia’s largest bourse by market value, last month announced a $2.2 billion bid for the London Metal Exchange and is waiting on LME shareholders and U.K. regulators for approval.

Osaka Securities rose 0.7 percent to 457,500 yen at the 11:30 a.m. trading break on Osaka’s Jasdaq market today. The Nikkei 225 Stock Average (NKY) fell 0.1 percent.

The bourses will hold shareholder meetings this fall or near the end of the year to vote on the merger, OSE President Michio Yoneda told reporters on May 28 in Osaka. The Tokyo bourse, home to Sony Corp. and Toyota Motor Corp., will buy 50 percent to 66.67 percent of Osaka’s outstanding stock.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at; Toshiro Hasegawa in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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