Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. have entered final takeover talks, forging a deal that would unite Japan’s largest bourse operators next year, Nikkei reported, without citing anyone.

Tokyo Stock Exchange, which runs the main venue in the world’s third-largest equity market, would offer to buy between 50 percent and 66 percent of Osaka, according to the newspaper. Nikkei said Monday that Tokyo Stock Exchange would be valued 1.5 to 2 times more than Osaka, which had a market capitalization of 98.6 billion yen ($1.26 billion) at the end of last week.

Tokyo Stock Exchange has made no decision like that reported Monday, the bourse said in a Japanese-language statement posted on its website. Osaka’s bourse has made no decision on a merger, it said in a statement. Osaka Securities Exchange, Japan’s second largest, was poised to rise 16 percent to 423,000 yen from the closing price of 365,000 yen.

Atsushi Saito, TSE’s president, said in a March 10 interview that he planned discussions with Osaka, a day before Japan’s record earthquake. While the Tokyo bourse isn’t publicly traded, the Nikkei report implies it will be valued more than Chicago Board Options Exchange owner CBOE Holdings Inc. and less than London Stock Exchange Group Plc, Bloomberg data show.

Tokyo is “the last large private exchange in the world’s financial centers,” Jamie Selway, a managing director at New York-based Investment Technology Group Inc., said in a telephone interview. The company would “get the benefit of merging into a public company. There’s a cost savings in terms of not having to do an IPO.”

The global financial crisis, which drove the Nikkei 225 Stock Average to a 26-year low, prompted the Tokyo exchange to delay an initial public offering in March 2009.

Tokyo Stock Exchange is valued between $1.89 billion and $2.52 billion, according to the ratio in Nikkei’s report Monday. Added to Osaka’s Nov. 4 market capitalization, the combined company has a value of $3.15 billion to $3.78 billion, the data show. That’s more than Chicago-based CBOE at $2.46 billion and smaller than London Stock Exchange at $3.79 billion. 

Hong Kong Exchanges & Clearing Ltd. is the world’s biggest bourse operator at $18.9 billion, followed by Chicago-based CME Group Inc. at $18.1 billion.

More than $30 billion in exchange mergers have been announced worldwide since October 2010. One has been approved by shareholders: Deutsche Boerse AG’s bid for NYSE Euronext. London Stock Exchange’s offer for Toronto-based TMX Group Inc. was withdrawn because too few owners supported it, and Australia blocked Singapore Exchange Ltd.’s bid for ASX Ltd.

An alliance with Osaka would give the Tokyo exchange access to Nikkei 225 Stock Average futures trading after Asia topped Europe and the Americas last year in terms of derivatives transactions. The Tokyo Stock Exchange is facing competition from Chi-X Japan Ltd., an alternative equity venue that began trading in July 2010. 

(Bloomberg)