Singapore Exchange agreed to buy Australian exchange ASX for A$8.4 billion ($8.3 billion).

The Singapore Exchange offer is worth A$48 per share of ASX, a 37% premium over the company's closing price on Oct. 22, Bloomberg News reported. The two exchanges will be separate legal entities and subject to local regulation.

The new company aims to compete with competitors such as the planned Chi-X Global Inc electronic trading platform and the Hong Kong stock exchange.

ASX shareholders will get A$22 cash and 3.473 new shares in Singapore Exchange for every share they hold in the Australian company.

Markets reacted negatively to the offer. Shares in Singapore Exchange dipped 6.2% to S$8.95

"We see SGX's acquisition of ASX as being richly priced," Srikanth Vadlamani, an analyst at Nomura Holdings Inc. wrote in a note to clients. "The extent of cost savings implies to us that the success of the deal hinges upon the combined entity being able to realize material revenue synergies."

"However, we do not see obvious revenue synergies."

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