TMX stock rises after Maple extends bid

Tue May 1, 2012 2:29pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - TMX Group (X.TO: Quote) shares rose on Tuesday after the financial institutions bidding for the Canadian stock exchange operator came a step closer to completing the elusive C$3.8 billion ($3.86 billion) takeover deal.

But the shares held below the bid price on fears that the complicated transaction could still fall apart due to regulatory concerns.

Maple Group, whose 13 members include some of Canada's biggest banks, extended its takeover offer for TMX, operator of the Toronto Stock Exchange and other markets, for a seventh time on Monday. It also said it had reached deals to buy competing stock exchange Alpha Group and the Canadian Depository for Securities Ltd clearing system.

TMX shares rose as much as 3 percent to C$46.44 on Tuesday, but were still below Maple's C$50 a share offer.

The market, however, seems to have taken Maple's moves on Monday as a signal that the deal, first announced last May, is finally taking concrete steps forward.

Agreement among the diverse parties involved in the consortium on prices to be paid for Alpha and CDS, owned by some of the same banks that are in the Maple Group, was seen as evidence that they willing to work together to get the TMX takeover done in a reasonable time frame. Maple has insisted that its takeover of TMX is contingent on it also getting Alpha and CDS.

"It is not surprising that Maple was able to negotiate purchases of Alpha and CDS, which Maple already controlled," Ed Ditmire, an analyst at Macquarie Securities in New York, said in a research note to clients.

"But it is encouraging that they've set prices which seem unlikely to be materially dilutive to the combined entity."   Continued...