Yesterday TMX Group and LSE Group announced a termination of their planned merger, just one day before shareholders were scheduled to vote on the deal. While the proposal had garnered quite a bit of flak, especially in Canada where a group of Canadian banks bonded together to make a counter-offer, most analysts I had spoken to on the subject expected the deal to go through with very few problems.
Earlier this year there was a rash of proposed exchange mergers. Since that time, though, most have seen the chopping block. In Australia, the Secretary of Treasury said he would not support the planned merger of SGX and ASX, effectively nixing that deal, and now TMX and LSE say their deal has fallen through as well because "it is clear that the two-thirds threshold required to approve the merger would not have been achieved," the TMX press release said.
This is particularly surprising considering most regulators in Canada seemed to be getting behind the deal and most analysts pointed out the synergies a TMX/LSE combined entity would have.
With these mergers getting the axe because of political/regulatory concerns and lack of shareholder interest, attention must be paid to the proposed NYSE Euronext and Deutsche Börse merger. Already, one would-be contender (a combined Nasdaq OMX/Intercontinental Exchange) for NYSE has stepped aside after the Justic Department said it would not allow the deal on anti-trust concerns.
At one point, Paul Zubulake, an analyst at Aite Group, had said the TMX/LSE merger would be a test for other cross-border mergers and probably would create presedent for other mergers in the works. Now that the LTMX Group (the proposed name for the combined entity) is circling the drain, it has to making NYSE and DB nervous about their own hoped for mega-exchange.
What do you think? Will TMX and LSE abandoning their merger on lack of shareholder support have an impact on what NYSE and DB do going forward? Will the Maple Group continue with its counter-bid now that there isn't the threat that an overseas company will control the Canadian financial markets?