Although the proposed merger of the Australian Securities Exchange (ASX) and the Singapore Exchange Limited (SGX) was blocked earlier this year by nationalistic sentiment, also a concern with the planned merger of Canada’s TMX Group and the London Stock Exchange (LSE), the TMX/LSE tie-up appears to be moving forward despite a counter-bid from the Maple Group.
On June 3, Canada’s competition authority issued a "no action letter" saying it doesn’t intend to challenge the C$3.46 billion ($3.53 billion) deal. The TMX/LSE merger still requires more than a dozen approvals from agencies and regulators. Among those is Canada’s industry minister who must determine whether it is a "net benefit" to Canada.
Complicating matters, the Maple Group, a group of Canadian banks and pension funds, recently announced intentions to bring its offer to acquire TMX Group directly to shareholders. Paul Zubulake, senior analyst at Aite Group, says the Maple Group is going to have to make an offer shareholders literally can’t refuse at this point. "In reality, shareholders would be looking for a better deal out of LSE. All the Maple Group offer really is doing is providing leverage for a better offer," he says.
Zubulake says the expected synergies and benefits of merging with LSE probably are better than the C$48-a-share cash-and-stock offer the Maple Group is proposing. The combined company, to be named LTMX Group Plc, would allow the exchanges effectively to double their memberships and still run their businesses independently.
Shareholders at TMX Group and LSE are scheduled to vote on June 30.