The Johannesburg Stock Exchange has reached agreement to buy the Bond Exchange of South Africa after raising its initial offer price by 39% from R173 million to R240.58 million.
The higher valuation of Besa has overcome objections raised by the unlisted market and its largest shareholder the New Zealand Stock Exchange to the JSE's initial offer which was tabled in October.
The agreement marks the end of a decade-long pursuit of its neighbour by the JSE, which believes that the consolidation of the two markets is the best way in which to grow South Africa's interest rate markets.
JSE Deputy CEO Nicky Newton-King says: "We've listened to the market and done our homework: On-exchange trade in derivative interest rate instruments is low by international standards, which are concerning developments for participants in South African financial markets. Research shows that off-shore trade in South African bonds accounted for approximately 40% of turnover and OTC trade accounts for almost all of the trade in interest-rate derivatives."
The JSE has also agreed to keep Besa's fee structure intact without increase for two years and to retain all staff.
Garth Greubel, Besa's CEO, comments: "Our feedback from Besa market participants indicates clearly that key elements of the current market structure are important to its ongoing efficiency. Besa and the JSE have agreed on this. Post integration, the key bond market fundamentals will remain in place and will be supplemented by a wide ranging review of all products, services and infrastructure."