Maple launches formal $3.8 billion hostile bid for TMX

Mon Jun 13, 2011 3:19pm EDT
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By Pav Jordan and Solarina Ho

TORONTO (Reuters) - A Canadian consortium of banks and pension funds has taken its $3.8 billion (C$3.7 billion) takeover offer directly to TMX Group shareholders, touting the proposal as the best way to keep the country's exchanges out of foreign hands.

Maple Group Acquisition Corp launched the hostile bid on Monday through a takeover circular that outlines an alternative to London Stock Exchange Group's friendly $3.5 billion bid for TMX, the operator of the Toronto Stock Exchange.

Maple's formal offer is nearly identical to a preliminary proposal unveiled nearly a month ago, except Maple now will buy up to 70 percent of TMX shares, up from 60 percent originally. But the offer price of C$48 a share in cash is the same.

Even so, TMX's stock rose about 1 percent on Monday, signaling some shareholders liked the overall proposal.

"Now that the Maple bid is out and they've improved it, but not really sweetened it, I think the TMX stock is already responding," said Chris Damas an independent analyst who owns a sizable number of TMX shares. He says he now favors the Maple offer, given the information presented so far, but he would still like to see a higher price.

The TMX takeover battle, which has polarized Canadian public opinion, is part of a wave of consolidation sweeping the world's top exchanges. Singapore Exchange (SGX) Ltd's triggered a spate of deals last year with its failed attempt to buy Australia's ASX Ltd.

With time running out before a June 30 shareholder vote on the LSE offer, Maple also extended an olive branch to TMX's current management, saying it will retain Chief Executive Tom Kloet and his team.

The gesture resonates because Kloet, then an outsider, took the helm of the newly formed TMX in 2008, beating out Luc Bertrand, a banker who now is the public face of the Maple Group.   Continued...

<p>People walk by a sign displaying TSX information in Toronto, August 17, 2009. REUTERS/Mark Blinch</p>