There was significant merger activity among world stock exchanges in 2011 with proposed deals totaling more than $30 billion. But none of the agreements have been finalized, including a bid for Toronto Stock Exchange owner TMX Group worth $3.8 billion.
Maple Group Acquisition Corporation, a consortium of 13 Canadian banks, pension funds and financial institutions, began formal takeover talks with TMX in July. Last month, the TMX board of directors approved the agreement, which still requires shareholder and regulatory approval.
“It is our belief that an integrated exchange and clearing group across the full spectrum of equity and derivative products offers significant efficiencies, creates the right conditions to drive increased economic activity and international investment in Canada and contributes to the ongoing stability of Canada’s financial system,” Maple Group spokesman Luc Bertrand said in prepared remarks before a hearing into the bid convened by Quebec’s Autorité des marchés financiers in late November.
Bertrand, vice-chairman of National Bank, said the deal serves all market participants and Canada’s capital markets while providing “tremendous potential value” to Montreal and Quebec’s financial community.
“Through this agreement, TMX Group’s ability to execute a business plan focused on growth is improved and accelerated, and our company’s global position is strengthened even further,” added Tom Kloet, TMX’s CEO.
The Ontario Securities Commission also held two days of hearings into the bid and the federal Competition Bureau is reviewing Maple’s plans to merge the exchange group with two other businesses, the rival Alpha Group trading system and the CDS clearing house. Critics argue the deal will create a securities trading monopoly for the TMX Group.
The takeover play for TMX Group started in February, when the company announced a proposal to merge the TSX with the London Stock Exchange. Two months later, Maple announced a hostile bid.
The TMX and the LSE subsequently cancelled their deal just 24 hours before a shareholder vote after it became clear they didn’t have the support to see the agreement through.
The Maple offer has been extended to January 31, 2012; it is expected to receive final regulatory approval early in the new year.
The members of the consortium are: the Alberta Investment Management Corp., Caisse de dépôt et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets, Desjardins Financial, Dundee Capital Markets, Fonds de solidarité des travailleurs du Quebec, GMP Capital, National Bank Financial, Ontario Teachers’ Pension Plan, Scotia Capital, TD Securities and Manulife.
In other stock exchange merger activity, shareholders have approved a proposed $9 billion merger between NYSE Euronext and Deutsche Boerse AG, but that deal also has to clear regulatory hurdles.
In November, the two exchanges submitted a proposal to deal with European anti-trust concerns.
The deadline for a final decision on the merger—which would create the world’s largest stock exchange operator—has been extended to January 23, 2012.
Two other exchange merger proposals were shelved earlier this year. The Australian government scuppered a bid by the Singapore Exchange for the ASX and a hostile offer for the NYSE was dropped by Nasdaq OMX Group and Intercontinental Exchange after regulators signaled the deal would be blocked.
Doug Watt is an Ottawa-based writer and editor.