The Toronto Star reports this evening that, “Analysts say the merger of the TMX Group with the London Stock Exchange could be a boost for Canadian resource companies, but a prominent critic says the deal could mean losing control of financial regulation and cost this country high-paying jobs. …The TSX and the TSX Venture Exchange, both owned by the TMX Group, list more than 1,500 mining companies combined.”
“The head of a nationalist watchdog group fears allowing the two exchange companies to combine would mean a loss of jobs, both at the exchanges themselves, and among the broader financial sector, as more firms choose to list their stocks in London. ‘We’ve watched this happen so many times when Canadian companies get taken over. At first, they say ‘it will be good for you, and we’ll keep a Canadian headquarters,’ but inevitably those jobs shift to the home base,’ said Maude Barlow, national chairwoman for the Council of Canadians. If Canadian companies do shift their listings to London, England, they could be following financial rules set outside this country, Barlow fears.”
“Barlow, meanwhile, pointed to U.S. Steel’s 2007 takeover of Stelco and Brazilian mining giant Vale’s takeover of Inco as examples of what can happen when foreign companies take over Canadian firms. ‘U.S. Steel told the Harper government it would keep jobs here when it took over Stelco and then laid off hundreds. Ditto Brazil’s Vale when it took over Inco in Sudbury, leading to an awful and bruising strike.’ Barlow isn’t convinced by the companies’ description of the stock exchange deal as a merger of equals. ‘I don’t care how they sugar-coat this, it’s clearly more a takeover than a merger. London shareholders get more of the company and the chair of the London exchange is the chair of the combined company,’ Barlow said.”
“This isn’t just a takeover of a widget factory, Barlow argued, but something far more important. If a mining company — or any other firm — doesn’t like the rules in Toronto, the new combined exchange would make it easier for them to shift to London, where the rules could potentially be more favourable, she said. ‘We’re talking about the right to regulate our financial system. When you allow a major financial institution to be taken over like this, that’s what’s at stake,’ Barlow said.”
The Canadian Press reports that, “Maude Barlow of the Council of Canadians expressed concern that the company would effectively be foreign owned, adding that the deal will likely result in job losses and the relinquishment of Canadian regulatory control as the exchanges become disconnected from any one jurisdiction. ‘Any decisions made around standards regulations, where this money goes, how it’s used in the end, it will be much harder for us to have a say in that here in Canada.'”
“Industry Minister Tony Clement said his department will look at the deal to see whether it requires an official review to determine if it’s good for Canada — like the one last year in which Clement stopped the US$38.6-billion takeover of fertilizer company PotashCorp by Anglo-American mining giant BHP Billiton. …The deal must also be approved by the Ontario and Quebec securities regulators, which oversee the Toronto and Montreal exchanges, respectively. Ontario has said it will review the regulatory issues involved, while Quebec said it will also launch a public consultation. The Quebec government used the deal to reaffirm its opposition to a national securities regulator, saying the potential merger shows the benefit of having a strong local regulator, to defend local interests. Ontario Finance Minister Dwight Duncan, who supports a national regulator, said Wednesday there are a lot of unanswered questions surrounding the deal.”
The news reports are at http://www.thestar.com/business/article/936074–analysts-give-proposed-merger-a-cautious-thumbs-up and http://www.winnipegfreepress.com/breakingnews/tmx-chief-confident-that-merger-with-lse-will-meet-canadas-net-benefit-rule-115630274.html.
