May 31, 2012 / 11:16 AM / in 6 years

Maple extends C$3.8 billion bid for Canada's TMX Group

TORONTO (Reuters) - The Canadian consortium of financial institutions bidding for the operator of the Toronto Stock Exchange extended its offer for an eighth time on Thursday and said it was confident it would complete the deal by its July 31 deadline because the process cannot drag on indefinitely.

Prolonging the C$3.8 billion ($3.68 billion) bid to buy TMX Group Inc (X.TO), Maple Group said the extension will allow for the regulatory approvals needed for its ambitious plan that would transform Canada’s stock trading landscape.

Luc Bertrand, Maple’s key spokesman and vice chairman of National Bank Financial, said he is very confident the year-long deal process will be finalized over the next two months given support from Canada’s financial and investing community.

“I think everybody has a responsibility to complete the work and get it done and so, no, it can’t go on and on and on,” Bertrand said in a response to a question on whether the deal would be further extended.

“That’s just not fair to shareholders at one point. I think everybody understands that obligation... We’re very confident we’ll be able to complete it by then.”

Maple, which comprises most of Canada’s biggest banks as well as pension funds, Canada’s largest insurer and other financial groups, wants to combine TMX with bank-owned Alpha Group, Canada’s second-biggest stock trading venue.

It also wants to wrap in the Canadian Depository for Securities Ltd, the clearing system for securities trades.

Bertrand said the proposed regulatory oversight of the combined entity will provide “ironclad protection” for the investing public and dealers outside the Maple Group.

Critics have said the deal could concentrate too much power in the hands of a single player, creating a near monopoly for Canadian stock trading and clearing operations.

But Bertrand said recent draft rules like the ones issued by the Ontario Securities Commission, Canada’s most powerful securities regulator, would protect competition in equities trading and ensures the costs do not skyrocket.

“The Maple transaction will not create a so-called ‘regulated monopoly,’” he said in a speech.

He said equities trading in Canada will remain “vigorously competitive,” with alternative trading venues such as Chi-X, Pure Trading, Omega and other U.S-based alternative trading systems, as well as major U.S. exchanges.

A 30-day comment period on the OSC rules expires on Monday.

“If there is a groundswell of opposition, I certainly haven’t seen it,” Bertrand said.

Regulators in Ontario, Quebec, Alberta and British Columbia are reviewing the deal, as is the federal Competition Bureau, an independent law-enforcement agency.

In a submission to the OSC, Thomas Caldwell, chairman of Caldwell Financial and a TMX shareholder, said given the safeguards developed by the regulator he has no objection to the deal proceeding.

“Our primary concerns related to equal access and cost for both TMX and Canadian Depository for Securities services,” he wrote. “These issues have been satisfactorily addressed through the conditions now attached to this deal.”

TMX shares closed 13 Canadian cents higher at C$46.05 on the Toronto Stock Exchange, still below Maple’s C$50 a share offer.

($1 = $1.033 Canadian)

Additional reporting by Euan Rocha; Editing by Janet Guttsman and Jeffrey Hodgson

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