Canadian TMX Bid May Trumpet Nationalism

A group of Canadian banks and pension funds is offering to buy Toronto Stock Exchange owner TMX Group Inc. (X) in a bid that champions a domestic alternative to London Stock Exchange Group Plc (LSE)’s takeover agreement.

Ontario Finance Minister Dwight Duncan said in an interview yesterday that he welcomed the proposal from Maple Group Acquisition Corp., a consortium including Toronto-Dominion Bank that said it would pay more than the current share price of TMX. Toronto-based TMX already trades 7.2 percent higher than LSE’s Feb. 9 bid. 

Nationalist concerns are increasing amid a wave of exchange mergers worldwide, including Singapore Exchange Ltd. (SGX)’s October bid for Sydney-based ASX Ltd. (ASX), which was withdrawn after failing to win Australian government support. U.S. Senator Charles Schumer, a Democrat from New York, said in February that his support for Frankfurt-based Deutsche Boerse AG (DB1)’s deal for NYSE Euronext (NYX) of New York was contingent on it being structured as a merger of equals. 

“I’m sure nationalism will factor into people’s thinking,” said Shubha Khan, an analyst at National Bank Financial in Toronto. “As far as government and regulators are concerned — though they may not admit it — the takeover of a Canadian exchange by Canadian institutions would probably be more palatable.” 

TMX said yesterday it received a cash-and-stock proposal from Maple Group offering more than TMX’s current share price. TMX shares closed at C$41.75 on May 13, or 7.4 percent higher than LSE’s C$38.89-a-share all-stock agreement from Feb. 9, Bloomberg data show. Maple Group would pay C$48 a share, with 70 percent in cash and the rest in stock, the Financial Times said yesterday, citing people it didn’t identify.

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