IN THE NEWS ~ Canada Opposition Party Says LSE-TMX Tie-Up Not In Public Interest

NDP calls for public consultation on foreign ‘takeover’ of TMX Group

Posted on Wed, Jun 29, 2011, 12:28 pm by Canadian Press

NDP Industry critic Peter Julian speaks during a news conference in Ottawa, Wednesday. Julian called on the government to hold public consultations on the proposed takeover ot the TMX group, owner of the Toronto Stock Exchange by the London Stock Exchange. THE CANADIAN PRESS/Adrian Wyld

• Maple Group makes push to woo TMX
• Homegrown TMX bid turns hostile
• Ontario TMX merger hearing in July

The New Democrats are blasting the Harper government over its handling of the TMX Group takeover, saying it should have called public consultations months ago on a bid from the London Stock Exchange.

Industry critic Peter Julian says the secretive process adopted by the government shareholders of the company that runs the Toronto Stock Exchange in the dark about Ottawa’s position as they prepare to choose between the foreign takeover and a rival bid from Canadian investors.

Julian says the government should hold public consultations to determine whether the takeover is in the public interest.

TMX Group shareholders will vote on the offers on Thursday, but Ottawa has set a mid-July date for revealing whether the London bid would meet the net benefit criteria under the Investment Canada Act.

Provincial authorities, particularly in Ontario and Quebec, have also not formally weighed in on the issue, although both governments have expressed concern.

Julian says he considers Canada’s capital markets a strategic asset and believes the deal on the table should be rejected.

He says his concern is that the arrangement as currently constituted does not represent a merger of equals, adding that Canadians would be a minority on the board of directors.

The Harper government has rejected foreign takeovers on two separate occasions since 2006 — that of Potash Corp. to an Australian concern, and of MacDonald, Dettwiler to Alliant Techsystems Inc.

*** Canada Opposition Party Says LSE-TMX Tie-Up Not In Public Interest

OTTAWA (Dow Jones)--Canada's main opposition party called on the Conservative government Wednesday to hold public hearings on a proposed tie-up between London Stock Exchange Group PLC (LSE.LN) and TMX Group Inc. (X.T), arguing the deal isn't in the public interest.

The left-leaning New Democratic Party said the arrangement, as structured, is flawed and would lead to a foreign takeover of Canada's capital markets. It urged the federal government, which has a majority of seats in the legislature, to refrain from giving the deal its "rubber-stamp" approval.

Under Canadian law, any foreign acquisition or investment over C$312 million (US$317.5 million) requires federal government approval, and must pass a test ensuring it provides a so-called net benefit to the country.

The deal "is a takeover of our capital markets, so this decision must be taken with prudence and with public consultations," said Peter Julian, the NDP industry critic.

Among the chief concerns for the NDP is ensuring Canadians have equal representation on the proposed new company's board. At present, Canadians would get seven of 15 board seats should the LSE deal win approval from shareholders and regulators, with co-headquarters in Toronto and London. But TMX board representation could drop to as few as three directors after four years, according to terms of the deal.

Julian said the Canadian government should also ensure Canadian regulators have oversight of market activities, and that regional interests are protected, especially in Quebec and British Columbia - where the NDP hold a good chunk of seats.

The Conservative government doesn't require parliamentary approval if it opts to endorse a foreign acquisition. Canadian officials are reviewing the deal, and it's expected they will ask for an extension in mid-July.

Shareholders vote on the deal Thursday, but proxies were already due. LSE, which proposed the merger with TMX in February, is expected to win support for the deal from its own shareholders easily. The vote in Toronto among TMX shareholders, however, is expected to be closer.

Meanwhile, TMX investors are weighing a rival, hostile C$3.8 billion bid by Maple Group Acquisition Corp., a consortium of large Canadian financial firms. Ahead of the vote, many investors have stayed on the fence, triggering sweeteners last week from both sides.

-By Paul Vieira, Dow Jones Newswires: 613-237-0669;

(Ben Dummett in Toronto contributed to this article.)

***TMX-LSE deal needs public consultations, NDP says
NDP industry critic Peter Julian held a news conference Wednesday to outline concerns about the proposed TMX and LSE merger. (Darryl Dyck/Canadian Press)

The NDP wants the Conservative government to hold public consultations if the proposed merger between the London Stock Exchange and TMX Group Inc. is approved by shareholders.

Opposition industry critic Peter Julian held a news conference Wednesday to outline NDP concerns about the LSE offer, which is to be voted on by TMX shareholders on Thursday.

Julian said the Tories shouldn't automatically give the green light to the deal, which he described as a "takeover" and not in the national interest.

"In our opinion, the NDP's opinion, this shouldn't lead to a quick rubber-stamping of approval by the industry minister and by the Conservative government," he said. "This decision must be taken with prudence and in a responsible way and certainly with public consultations."

The MP said the Conservatives need to consider the ramifications if the merger goes ahead and should impose certain conditions. Among these conditions would be ensuring equal representation on the board of directors and protection for regional economic interests and emerging sectors, Julian said.

The NDP is raising the TMX-LSE issue this week because shareholders in TMX will be making a critical decision about who controls the company that owns Canada's largest stock exchange.

Another offer on table
LSE made its bid in February and shareholders are choosing whether to accept or reject it. The deadline for write-in votes was Tuesday evening, and officials will spend Wednesday counting those votes. On Thursday, more votes will be cast at the shareholder meeting.

Another offer on the table for TMX, from the Canadian consortium Maple Group, says that it will pay more per share than the LSE and that its offer values the TMX at $3.8 billion.

The TMX-LSE deal is valued at about $3.4 billion, based on the latest share prices.

The NDP wouldn't go so far as to say the LSE should be blocked from buying TMX. Julian would only say that public consultations should be held about any takeover of this "strategic asset."

"The offer that is on the table now is clearly not in the national interest," he said.

When the proposed merger was announced in February, Tony Clement — Christian Paradis's predecessor as industry minister — said it would be reviewed by the federal government to determine if it was acceptable under the Investment Canada Act.

According to the act, foreign investments of more than $299 million US are subject to a federal review to ensure they are of so-called "net benefit" to the country. Clement also indicated the provinces would have a say over whether the deal was "viable."

***Canada opposition party concerned by LSE-TMX bid

OTTAWA, June 28 | Tue Jun 28, 2011 2:36pm EDT

OTTAWA, June 28 (Reuters) - Canada's main opposition New Democratic Party has concerns about the London Stock Exchange's (LSE.L) takeover offer for TMX (X.TO), operator of the Toronto Stock Exchange, the party said on Tuesday.

The lefti-leaning NDP said it would "outline concerns" about the deal on Wednesday morning, a day ahead of a TMX shareholder vote on the LSE offer.

The party's industry spokesman, Member of Parliament Peter Julian, will outline what the party thinks the government must do to ensure that any deal is in the best interests of Canadians.

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