* ISS says concerned by level of leverage in Maple bid
* Says LSE bid improves TMX’s global competitive position (Adds background, details on ISS recommendation)
The well-respected firm said there is little incentive for shareholders to support the rival cash-and-stock offer from Maple Group, a consortium of Canadian banks and pension funds, given the level of leverage involved in that offer.
“We recommend shareholders take the bird in hand and vote for the proposed merger-of-equals with the LSE,” the firm said.
The recommendation comes just a day after both the LSE and Maple sweetened their offers in a bid to sway TMX shareholders, who are expected to vote on the LSE deal on June 30. [ID:nN1E75L17E]
The sweetened LSE bid equates to roughly around C$49 a share, while the Maple Group’s revised offer is worth about C$50 a share. TMX shares closed Wednesday at C$44.25 on the Toronto Stock Exchange.
ISS also described the strategic rationale behind the LSE deal as sound.
“The merger should allow TMX Group to achieve the cost synergies associated with the combination of technology platforms, leverage the combined company’s depth of liquidity to gain new issuer listings, and improve the company’s global competitive position in a rapidly changing industry,” it said.
The ISS recommendation matches one from rival proxy advisory firm Glass Lewis, which — in a recommendation released before the latest enhancements to the two offers — also advised TMX shareholders to vote for the LSE proposal. (Reporting by Euan Rocha; editing by Janet Guttsman)