TMX shares rise on second bid

Shares in the TMX Group rose more than five per cent Monday after the firm that operates the Toronto Stock Exchange received a multi-billion-dollar homegrown takeover bid.

Its stock gained $2.30 to close at $44.05 on the TSX in the first trading after the announcement.

Maple Group Acquisition Corp. — comprised of four big banks and five pension funds — submitted a $3.6-billion bid, or $48 per share for TMX Group over the weekend.

It would see the stock markets operator stay in Canadian hands and have a broad ownership base.

It would also top the approach from the London Stock Exchange, which has proposed a merger with the TMX Group which would create a $6-billion entity and form the world's eighth-biggest securities market.

Maple Group said it would maintain current management, staffing levels and shareholder dividends if it succeeds.

"This is a superior outcome for Canadian capital markets," Luc Bertrand, vice-chairman of National Bank Financial and spokesman for Maple Group Acquisition Corp. said on a conference call Monday with investors and analysts.

On Monday, the LSE said it remained committed to working with TMX to complete the merger gain regulatory approval, saying the deal "offers compelling financial, strategic and operational benefits for shareholders, the full breadth of market participants, listed companies of all sizes, investors and other stakeholders."

The proposed "merger of equals," which would actually be a takeover by the LSE Group, has been criticized by the Ontario government and big Canadian banks, among others, due to concerns that the deal could allow foreign interests to dominate decision-making on Canada's largest stock exchange.

Bertrand said Maple's proposed deal is far superior to the LSE offer because it would see the stock markets operator stay in Canadian hands and have a broad ownership base.

Bidders are some of TSX's biggest customers 

In addition, he said, it would reduce costs of the operator through the planned acquisition of bank-owned alternative trading company Alpha and CDS Inc., a clearing and depository firm, to create a bigger Canadian-based exchange.

The big players involved in the takeover group are also some of the exchanges biggest customers, Bertrand said.

"Each Maple investor is here because it believes it can create significant value for its own shareholders and planned beneficiaries," he said.    "We believe with the significant premium ... and the sponsorship of several of the largest market participants, this is clearly setting out a path for greater value."

Maple's investors include: CIBC World Markets Inc., National Bank Financial Inc., Scotia Capital Inc., TD Securities Inc., Alberta Investment Management Corporation, Caisse de depot et placement du Quebec, Fonds de solidarite des travailleurs du Quebec and Ontario Teachers' Pension Plan Board.

Last week TMX Group CEO Tom Kloet said it would file applications with Canadian provincial securities commissions seeking regulatory approval of TMX-LSE bid within weeks.

The TMX and LSE argue their combination will create a global player, including the leading market for mining stocks, with the size necessary to compete.