TMX shareholders like LSE deal but fear politics

Thu Feb 10, 2011 3:29pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Pav Jordan

TORONTO (Reuters) - A friendly bid for Canadian exchange operator TMX Group could bring growth, higher profits and higher-profile listings, but leading shareholders fear political factors could derail the deal.

The offer for the Toronto Stock Exchange from the London Stock Exchange would create a transatlantic trading venue with a market value of about $6.9 billion, to be 55 percent-owned by LSE shareholders.

A single LSE shareholder -- Borse Dubai Ltd -- would hold just over 11 percent in a deal that is subject to scrutiny by two Canadian provincial regulators, and almost certainly from the federal government as well.

"It's unfortunate for us as a shareholder that the way this deal succeeds or fails is not going to be on economic merit," said Jim Hall, chairman of Mawer Investment Ltd, which controls 1.3 million TMX shares.

"It's going to be on political decisions and that's a frustrating position to be in as a shareholder."

Even before the deal was formally announced, Canadian politicians raised concerns about what it might mean for sovereignty and whether the takeover, which the partners repeatedly refer to as a "merger of equals," would be considered of net benefit under the Investment Canada Act.

On Thursday, most domestic newspapers carried opinion columns about the deal, with most speaking out against it.

"Let's not delude ourselves. The merger ... marks the beginning of the end for ultimate Canadian control of well-established firms that are listed on the stock market," business columnist Michel Girard wrote in Montreal's influential La Presse.   Continued...