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NEWS: Banks, pension funds announce new bid for Toronto Stock Exchange

The Canadian Press reports, “The operator of the Toronto Stock Exchange is being targeted by a new Canadian takeover bid even as it tries to push through a controversial merger with the London Stock Exchange. TMX Group Inc. said Saturday it has received a written proposal from a number of unidentified Canadian financial institutions but did not disclose any financial details of the bid. …A news release from TMX Group said the acquisition offer includes pension funds and banks and was operating under the name Maple Group Acquisition Corp. The TMX board of directors will evaluate the proposal. …(According to Ontario MPP Gilles Bisson) the takeover attempt appeared to involve no foreign interests so the federal government would not have to sign off on it (and) added (Ontario Finance Minister Dwight) Duncan would get the final say.”

“TMX Group is in the midst of an attempted multibillion-dollar merger with the London Stock Exchange, a proposal that has met with some opposition, including from some of Canada’s big banks (namely the Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and National Bank of Canada). …TMX Group announced Friday it has filed applications with provincial regulators to approve the merger with London Stock Exchange. It was hoped regulators would decide on whether to approve the merger sometime this fall. …A successful merger would see Toronto getting seven seats on the 15 member board of directors of the combined exchanges, for at least five years. After that the LSE board could vote to reduce that number, but not below a minimum of three seats.”

“The (new) proposal involves a number of significant conditions, including regulatory approval for the combination of TMX Group with both Alpha Group and CDS Inc… The six biggest Canadian banks, as well as Canaccord Capital, the Canada Pension Plan Investment Board and Desjardins Securities, set up the Alpha alternative market in 2008. Alpha is an electronic trading system that estimates it represents 20 to 25 per cent of all trading volume of TSX-listed securities. If the Toronto Stock Exchange gets bigger by joining with the LSE, Alpha could face increased competition.”

“A committee of the Ontario legislature said last month that both parties should rewrite their proposed multibillion dollar merger to better protect Canada’s interests. Bisson, a New Democrat member of that committee, said that a Canadian bid was welcome, but it raised fresh concerns and he called for the committee to be recalled to review the takeover bid.”

On March 3, the Toronto Star reported, “(On) the second day of the Ontario government’s hearings…the nationalist citizens’ group The Council of Canadians issued its own warning that the deal is more of a takeover by the London exchange than a merger because the British side would control the combined entity. ‘Canada’s experience with foreigners taking over strategic assets is not good,’ executive director Garry Neil said, citing the layoffs after U.S. Steel took over Stelco and a major strike after Brazilian mining giant bought Inco. Neil also said a merger would lead to increased pressure to harmonize market regulations to the lowest common denominator – a danger in Canada given that the country has been widely credited for tighter regulations that prevented damage seen elsewhere in the global financial meltdown.”

The Canadian Press report is at