New TMX takeover proposal eyes foreign expansion

Tue May 17, 2011 12:44pm EDT
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By Pav Jordan and Solarina Ho

TORONTO (Reuters) - A proposal by a group of Canadian banks and pension funds to take over the operator of the Toronto Stock Exchange offers cost savings and opportunities for international growth, the group said on Monday.

A consortium calling itself the Maple Group Acquisition Corp is proposing a C$3.6 billion ($3.7 billion) deal to buy TMX Group, aiming to derail a $3 billion friendly bid for the exchange operator by the London Stock Exchange.

Shares of TMX were up 6.01 percent at C$44.26 early on Monday afternoon on the Toronto Stock Exchange.

"It presents a clear path to creating additional value by optimizing the balance sheet, margin expansion, improved multiple potential and the ability to pursue international growth opportunities," said Luc Bertrand, the vice-chairman of National Bank of Canada, one of the banks involved in the proposal.

"There is huge value creation opportunity here, so at the end of the day the re-rating or increased valuation of the combined group will certainly allow the group to consider opportunities elsewhere," he said.

Maple officials told a conference call, however, that the group is not eyeing specific international expansion targets, and said it was premature to discuss whether it would be interested in the New York Stock Exchange, for example.

LSE and TMX also touted their deal, announced in February, as creating a more diversified and international company. The LSE-TMX plan has raised concerns in Canada about a national institution falling under control of a foreign-based company.

Maple Group said its members started informal discussions of an alternative bid around the time they started making public objections about the loss of Canadian control in the LSE-TMX proposal.   Continued...

<p>TMX Group CEO Tom Kloet speaks during a news conference in Toronto, February 9, 2011. REUTERS/Mark Blinch</p>