IN THE NEWS ~ Merger of TMX and London exchange fails to get shareholder support

Mary Gazze THE CANADIAN PRESS - TORONTO The operator of the Toronto Stock Exchange is now considering a hostile takeover bid after the Toronto and London exchanges killed their proposed $3.7-billion friendly merger Wednesday because there wasn't enough shareholder support to go ahead.
http://ipolitics.ca/2011/06/29/tmx-looks-at-maple-offer-after-shareholders-nix-merger-with-london/
THE LETHBRIDGE HERALD, A11, 2011/06/30
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Merger of TMX and London exchange fails to get shareholder support http://ipolitics.ca/2011/06/29/merger-of-toronto-and-london-exchange-operators-fails-to-get-shareholder-support/
CAPE BRETON POST, A7, 2011/06/30
CP

Projet annulé LE QUOTIDIEN, 28, 2011/06/30
LA PRESSE CANADIENNE
Projet annulé

Les opérateurs des bourses de Toronto et de Londres renoncent à leur projet de fusion de 3,7 G$ qui aurait donné naissance à un géant mondial, particulièrement en ce qui a trait aux titres miniers et énergétiques.

Dans un communiqué, le pdg du groupe TMX (TSX:X), Thomas Kloet, a expliqué mercredi qu'il était devenu évident que la transaction n'obtiendrait pas l'appui des deux tiers des actionnaires.

L'assemblée de jeudi aura lieu malgré tout, mais il n'y aura pas de vote des actionnaires sur la transaction. Une réunion semblable est aussi prévue à Londres.

M. Kloet a refusé de spéculer sur les motifs des actionnaires opposés à la fusion.

De son côté, la direction du London Stock Exchange Group (LSEG) a indiqué qu'une majorité écrasante d'actionnaires ayant voté par procuration appuyaient la transaction. Le pdg Xavier Rolet s'est dit très déçu des résultats du processus de ratification.

Il a ajouté que le LSEG avait d'autres projets de croissance dans les marchés des capitaux, les services d'information et la technologie, entre autres.

Le Groupe TMX versera 10 M$ au LSEG en frais d'annulation.

La bourse canadienne a indiqué qu'elle étudierait toutes les occasions d'affaires qui se présenteront à elle, incluant la proposition du consortium Maple, qu'elle a déjà rejetée à deux reprises.

Le LSEG recevrait un autre dédommagement de 29 M$ si une transaction était conclue entre les deux groupes canadiens au cours des 12 prochains mois.

Le consortium Maple regroupe 13 gros joueurs du monde canadien de la finance. La Banque Nationale, le Mouvement des caisses Desjardins et la Caisse de dépôt et placement du Québec en font partie, tout comme les banques Scotia, TD et CIBC, entre autres.

Cette organisation ad hoc offre 50 $ par action du Groupe TMX, pour un total de 3,8 G$. En vertu de sa proposition, aucun des actionnaires ne posséderait plus de 10% des actions de TMX. Le public investisseur détiendrait 40% de l'entreprise.

Le porte-parole de Maple et vice-président de la Banque Nationale, Luc Bertrand, s'est dit heureux de la décision des actionnaires de la Bourse de Toronto. " Nous espérons maintenant pouvoir engager un dialogue positif avec le conseil d'administration du Groupe TMX", a-t-il déclaré.

Le pari de Maple n'est toutefois pas gagné d'avance. Plusieurs critiques, dont Thomas Kloet, estiment que le regroupement du TMX avec le parquet alternatif Alpha et la chambre de compensation CDS qui appartiennent aux banques membres du consortium créerait un quasi-monopole.

Le Bureau de la concurrence doit se pencher sur la transaction. Les autorités des valeurs mobilières du Québec, de l'Ontario, de l'Alberta, de la Colombie-Britannique et de l'Alberta auront aussi leur mot à dire.

Le Groupe TMX possède notamment les Bourses de Toronto et de Montréal de même que la Bourse de croissance TSX.

Le ministre québécois des Finances, Raymond Bachand, a réagi en fin de journée en affirmant que le gouvernement du Québec " prend acte " de la décision du Groupe TMX et du LSEG et qu'il espère maintenant que le groupe Maple " mettra de l'avant une plate-forme efficace pour permettre à l'industrie canadienne de se développer et de continuer son internationalisation ".

À Bruxelles, où il est de passage dans le cadre d'une mission européenne jusqu'à vendredi, le premier ministre Jean Charest a préféré réserver ses commentaires pour jeudi. Il a appris la nouvelle vers 19 heures (heure locale), à la suite d'une rencontre avec le ministre-président de la Flandre, Kris Peeters. " Je l'apprends sur le pas de la porte en même temps que vous. Je n'ai aucune autre information que celle-là ", a-t-il dit, en ajoutant qu'il commenterait les faits le lendemain.

En début de semaine, le projet de fusion TMX-LSEG avait reçu l'appui de 11 personnalités du milieu torontois des affaires, dont le pdg de Caldwell Securities, Tom Caldwell, et celui de CI Financial, Bill Holland. Les firmes conseils ISS et Glass, Lewis & Co. avaient en outre recommandé aux actionnaires des deux sociétés de l'appuyer.

La proposition suscitait toutefois des inquiétudes dans les rangs des parlementaires à Québec, à Queen's Park et à Ottawa.

Mercredi matin, le porte-parole du NPD en matière de Finances, Peter Julian, affirmait que la transaction serait mauvaise pour le Canada. Les actionnaires du LSE auraient en effet détenu 55 pour cent des actions de la bourse fusionnée.

Le financier montréalais Stephen Jarislowsky s'était lui aussi opposé à la fusion. A son avis, Toronto n'a pas besoin de Londres pour devenir un joueur mondial dans la négociation de titres.

Mercredi, l'action de TMX à la Bourse de Toronto a clôturé en hausse de 64 cents, à 44,20 $.

Stock exchange merger fails to pass
WATERLOO REGION RECORD (FIRST), C10, 2011/06/30
Mary Gazze, The Canadian Press
BUSINESS, Page: C10

Stock exchange merger fails to pass
Mary Gazze, The Canadian Press

The operators of the Toronto and London stock exchanges have killed a $3.7-billion proposed merger, saying the controversial deal could not garner enough shareholder support to go ahead.

TMX Group said Wednesday that a majority of proxy votes received ahead of its Thursday annual meeting supported the deal but that was not enough to meet the required two-thirds approval.

TMX Group chief executive Tom Kloet said the company will now review a rival hostile takeover bid by Maple Group Acquisition Corp., a group of 13 major Canadian banks and pension funds.

"We will be evaluating opportunities including that one," Kloet told a conference call.

The Maple Group said it hopes the way will now be clear for its own bid, which also requires regulatory and shareholder approval.

"We are very pleased with the support our offer received from TMX Group shareholders. We commend the LSE and TMX for their efforts, and hope we may now engage in a positive dialogue with the TMX Group board," spokesperson Luc Bertrand said in a statement.

"Maple will continue to diligently pursue receipt of all necessary regulatory approvals and will continue to engage in a constructive dialogue with stakeholders from across the spectrum."

TMX will pay a $10-million break fee to the LSE group, and a further $29 million if the Maple deal goes through within 12 months.

The rejection of the merger with the LSE now puts more pressure on the TMX to negotiate a friendly deal with Maple Group, which now has the only bid on the table. The rival bidder's $3.7-billion offer has been repeatedly rejected by the TMX, mainly because it is considered loaded down with too much debt.

Kloet said the exchange owner still opposes that bid.

However, now that the LSE deal is dead, two major Canadian banks that had advised on that deal - Royal Bank of Canada and Bank of Montreal - may now be free to join the Maple Group and that could lead to a revised offer with financial conditions more palatable to the TMX.

In a statement, Xavier Rolet, the CEO of the London Stock Exchange Group said he was "disappointed."

"We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focused on growth and opportunity," he wrote.

Proponents of both bids have been waging a media and speaking blitz to win support in recent weeks.

Some financial players were concerned that Canada's stock exchange would be under foreign control, with the combined group's chief executive based in London. LSE shareholders would have owned 55 per cent of the combined company, while TMX Group shareholders would have owned 45.

The merger had received the stamp of approval Monday from a group of 11 top Bay Street players, including former TSX chief executive Rowland Fleming, Caldwell Securities chair and CEO Tom Caldwell, CI Financial executive chair Bill Holland and Raymond James chief executive Paul Allison.

The support of Holland was significant because independent mutual fund company CI Financial is one of TMX Group's largest shareholders.

Meanwhile, investment guru Stephen Jarislowsky, who was one of the key forces in organizing support against the BHP Billiton hostile takeover offer for Potash Corp., had thrown his support behind Maple, saying Toronto does not need the help of London to build a global player in the stock trading business.

Earlier Wednesday, NDP Industry critic Peter Julian said the deal, wasn't good for Canada.

"There is no other way to put it, it is a takeover of our capital markets," which he said should be regarded as a national strategic asset.

The LSE group and TMX had sweetened its offer in recent days in an attempt to lure investors to the all-stock deal, by proposing a special dividend of $4 per TMX share. The companies also promised to continue to pay a dividend equivalent to the current TMX rate, replacing an earlier plan that would have seen TMX shareholders take a hit.

The Maple Group countered by increasing its stock-and-cash offer to $50 per share up from $48 - on the condition that shareholders of TMX Group reject the merger with the LSE.

Had the merger with the LSE group gone ahead it would have required approval by the federal government under the Investment Canada Act - the same hurdle that tripped up BHP Billiton's hostile takeover bid for PotashCorp.

However the Maple bid has its own regulatory obstacles.

The offer will be reviewed by the Competition Bureau because several of the Maple consortium members are also investors in Alpha Group, a rival stock exchange that is a major competitor to the Toronto Stock Exchange.

Maple has said it wants to merge Alpha as well as CDS Clearing and Depository Services with TMX.

The deal will also require approval by provincial securities regulators in Quebec, Alberta, British Columbia and Ontario. TMX shareholders have until Aug. 8 to tender their shares to Maple Group's offer, but that could change.

Maple Group members include the Canada Pension Plan Investment Board, CIBC World Markets, the Ontario Teachers' Pension Plan, Scotia Capital, Manulife and Desjardins Financial Group.

Collectively, Maple members currently own 6.5 per cent of the TMX.

The Canadian Press ILLUS: The proposed $3.7-billion merger of the TMX Group and the London Stock Exchange Group has been killed because it doesn't have enough shareholder support to go through. The Canadian Press

© 2011 Torstar Corporation

London merger nixed
RED DEER ADVOCATE, C3,C4, 2011/06/30
MARY GAZZE, THE CANADIAN PRESS
Published | Publié: 2011-06-30
Received | Reçu: 2011-06-30 5:09 AM RED DEER ADVOCATE
BUSINESS, Page: C3,C4

London merger nixed
TMX LOOKS AT MAPLE OFFER AFTER SHAREHOLDERS BALK AT LSE OFFER
MARY GAZZE, THE CANADIAN PRESS

The operator of the Toronto Stock Exchange is now considering a hostile takeover bid after the Toronto and London exchanges killed their proposed $3.7-billion friendly merger Wednesday because there wasn't enough shareholder support to go ahead.

TMX Group (TSX:X) said Wednesday that a majority of proxy votes received ahead of a Thursday meeting supported the deal but that was not enough to meet the required two-thirds approval.

TMX Group chief executive Tom Kloet said the company will now review a rival bid by Maple Group Acquisition Corp., a group of 13 major Canadian banks, financial companies and pension funds.

"We will be evaluating opportunities, including that one," Kloet told a conference call.

The Maple Group said it hopes the way will now be clear for its own bid, which also requires regulatory and shareholder approval.

"We are very pleased with the support our offer received from TMX Group shareholders. We commend the LSE and TMX for their efforts, and hope we may now engage in a positive dialogue with the TMX Group board," spokesman Luc Bertrand said in a statement.

"Maple will continue to diligently pursue receipt of all necessary regulatory approvals and will continue to engage in a constructive dialogue with stakeholders from across the spectrum."

TMX will pay a $10-million break fee to the LSEG (LSE:LSE), and a further $29 million if the Maple deal goes through within 12 months. Both the LSE and Maple bids were controversial. Some financial players were concerned that if the LSE won, Canada's largest stock exchange would have been 55 per cent controlled by London.

Maple Group was accused of stifling competition because members partly own a smaller, rival exchange.

The rejection of the merger with the LSE now puts more pressure on the TMX to negotiate a friendly deal with the Maple Group, which now has the only bid on the table.

On Wednesday, Kloet reiterated TMX's longstanding view that Maple's offer could bog down the exchange with too much debt.

"There are governance issues that we'd have to look at but in fairness to the Maple Group we've not had a conversation with them about those things," he said, citing the debt.

"Perhaps that's something that we would discuss if and when we have discussions with them but it would be premature to comment on that any further."

Now that the LSE deal is dead, Royal Bank of Canada and Bank of Montreal may now be free to join the Maple Group. The two major Canadian banks had advised LSE on the deal. Two new Maple players could lead to a revised offer with conditions more palatable to the TMX.

Neither Royal Bank nor BMO would comment Wednesday.

Ontario's Finance Minister Dwight Duncan, who was a vocal opponent of the LSE deal, said he was happy shareholders rejected the merger on their own without any government intervention.

"And what's even more appealing about this is that Canadians, from every part of the country, through their pension funds, their banks, stood up and fulfilled the mandate of the free movement of capital and goods, not by government fiat but by having a better or different bid," he said.

Quebec's finance minister, Raymond Bachand, said he hopes the Maple offer will help boost the role of the Montreal Stock Exchange.

"We hope that Maple Group, which put down a competing offer, will put forward an effective platform to permit Canadian industry to develop and continue to become more global," he said.

Earlier Wednesday, federal NDP Industry critic Peter Julian said the LSE deal wasn't good for Canada.

"There is no other way to put it, it is a takeover of our capital markets," which he said should be regarded as a national strategic asset.

In a statement, Xavier Rolet, CEO of the London Stock Exchange Group, said he was "disappointed."

"We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focused on growth and opportunity," he wrote.

Proponents of the Maple and LSE bids had waged a media and speaking blitz to win support in recent weeks.

The LSEG and TMX had sweetened their offer in recent days by proposing a special dividend of $4 per TMX share and changing an earlier plan that would have seen TMX shareholders take a hit.

The Maple Group countered by increasing its stock-and-cash offer to $50 per share from $48 - on the condition that shareholders of TMX Group reject the merger with the LSE.

However the Maple bid has its own regulatory obstacles.

The offer needs approval by securities regulators in Quebec, Alberta, B.C. and Ontario and will be reviewed by the federal Competition Bureau because several of the Maple consortium members partly own Alpha Group, a stock exchange that is a major competitor to the TSX.

TMX shareholders have until Aug. 8 to tender their shares to Maple Group's offer, but that could change.

Maple Group members include the Canada Pension Plan Investment Board, CIBC World Markets, the Ontario Teachers' Pension Plan, Scotia Capital, Manulife and Desjardins Financial Group.

Collectively, Maple members currently own 6.5 per cent of the TMX.

Financial Services
THE TELEGRAM (ST. JOHN'S), D5, 2011/06/30
Mary Gazze, The Canadian Press
Published | Publié: 2011-06-30
Received | Reçu: 2011-06-30 5:09 AM THE TELEGRAM (ST. JOHN'S)
BUSINESS, Page: D5

Financial Services
Merger of Toronto, London exchange operators fails to get shareholder support
Mary Gazze, The Canadian Press

The operators of the Toronto and London stock exchanges have killed a $3.7-billion proposed merger, saying the controversial deal could not garner enough shareholder support to go ahead.

TMX Group said Wednesday that a majority of proxy votes received ahead of its annual meeting today supported the deal, but that was not enough to meet the required two-thirds approval.

TMX Group chief executive Tom Kloet said the company will now review a rival hostile takeover bid by Maple Group Acquisition Corp., a group of 13 major Canadian banks and pension funds.

"We will be evaluating opportunities including that one," Kloet told a conference call.

The Maple Group said it hopes the way will now be clear for its own bid, which also requires regulatory and shareholder approval.

"We are very pleased with the support our offer received from TMX Group shareholders. We commend the LSE and TMX for their efforts, and hope we may now engage in a positive dialogue with the TMX Group board," spokesman Luc Bertrand said in a statement.

"Maple will continue to diligently pursue receipt of all necessary regulatory approvals and will continue to engage in a constructive dialogue with stakeholders from across the spectrum."

TMX will pay a $10-million break fee to the LSEG, and a further $29 million if the Maple deal goes through within 12 months.

The rejection of the merger with the LSE now puts more pressure on the TMX to negotiate a friendly deal with Maple Group, which now has the only bid on the table. The rival bidder's $3.7-billion offer has been repeatedly rejected by the TMX, mainly because it is considered loaded down with too much debt.

Kloet said the exchange owner still opposes that bid.

However, now that the LSE deal is dead, two major Canadian banks that had advised on that deal - Royal Bank of Canada and Bank of Montreal - may now be free to join the Maple Group and that could lead to a revised offer with financial conditions more palatable to the TMX.

In a statement, Xavier Rolet, the CEO of the London Stock Exchange Group said he was "disappointed."

"We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focused on growth and opportunity," he wrote.

Proponents of both bids have been waging a media and speaking blitz to win support in recent weeks.

Some financial players were concerned that Canada's stock exchange would be under foreign control, with the combined group's chief executive based in London. LSE shareholders would have owned 55 per cent of the combined company, while TMX Group shareholders would have owned 45.

The merger had received the stamp of approval Monday from a group of 11 top Bay Street players, including former TSX chief executive Rowland Fleming, Caldwell Securities chairman and CEO Tom Caldwell, CI Financial executive chairman Bill Holland and Raymond James chief executive Paul Allison.

The support of Holland was significant because independent mutual fund company CI Financial is one of TMX Group's largest shareholders.

Meanwhile, investment guru Stephen Jarislowsky, who was one of the key forces in organizing support against the BHP Billiton hostile takeover offer for Potash Corp., had thrown his support behind Maple, saying Toronto does not need the help of London to build a global player in the stock trading business.

Earlier Wednesday, NDP Industry critic Peter Julian said the deal, wasn't good for Canada.

"There is no other way to put it, it is a takeover of our capital markets," which he said should be regarded as a national strategic asset.

The LSEG and TMX had sweetened its offer in recent days in an attempt to lure investors to the all-stock deal, by proposing a special dividend of $4 per TMX share. The companies also promised to continue to pay a dividend equivalent to the current TMX rate, replacing an earlier plan that would have seen TMX shareholders take a hit.

The Maple Group countered by increasing its stock-and-cash offer to $50 per share up from $48 - on the condition that shareholders of TMX Group reject the merger with the LSE.

Had the merger with the LSEG gone ahead it would have required approval by the federal government under the Investment Canada Act - the same hurdle that tripped up BHP Billiton's hostile takeover bid for PotashCorp.

However the Maple bid has its own regulatory obstacles.

The offer will be reviewed by the Competition Bureau because several of the Maple consortium members are also investors in Alpha Group, a rival stock exchange that is a major competitor to the Toronto Stock Exchange.

Maple has said it wants to merge Alpha as well as CDS Clearing and Depository Services with TMX.

The deal will also require approval by provincial securities regulators in Quebec, Alberta, British Columbia and Ontario. TMX shareholders have until Aug. 8 to tender their shares to Maple Group's offer, but that could change.

Maple Group members include the Canada Pension Plan Investment Board, CIBC World Markets, the Ontario Teachers' Pension Plan, Scotia Capital, Manulife and Desjardins Financial Group.

Collectively, Maple members currently own 6.5 per cent of the TMX.