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WIN! London-Toronto stock exchange takeover bid terminated

Neil speaking to an Ontario legislative committee studying the  takeover
Neil speaking to an Ontario legislative committee studying the takeover

The Toronto Star reports, “The owners of the Toronto Stock Exchange have agreed with the London Stock Exchange Group plc. to terminate their $3.7 billion merger agreement. Based on proxies filed by TMX Group Inc. shareholders as of Tuesday’s deadline, the merger was unlikely to receive the two-thirds majority required to proceed, the TMX and LSEG said in separate statements Wednesday. …The announcement comes a day before TMX shareholders were scheduled to vote on the merger at the company’s annual general meeting in Toronto.”

The Council of Canadians has been opposing the takeover bid for months.

On February 9, the day the deal was announced, the Toronto Star and the Canadian Press reported on our opposition to the proposed takeover. In the Toronto Star report, Council of Canadians chairperson Maude Barlow said, “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.”

On February 17, the Council of Canadians sent letters opposing the stock exchange takeover to Ontario finance minister Dwight Duncan and federal industry minister Tony Clement, and we issued a media release indicating that we had sent these letters.

On March 2, the Toronto Star, the Wall Street Journal and other media reported that Council of Canadians executive director Garry Neil spoke against the takeover at an all-party legislative committee hearing at Queen’s Park in Toronto. In his presentation, Neil said, “The Council of Canadians urges you to oppose the proposed merger of the London Stock Exchange and TMX Group. We first of all note that this is really a takeover of the Toronto Stock Exchange by the LSE, since the London group will control the Board and the Chairman’s position. This transaction is of no benefit to Ontario, it will bring risks for Canada’s financial stability and it will erode our ability to regulate financial markets in the public interest.”

On April 19, that Ontario legislative committee opted to make no recommendation on whether the takeover should proceed, but made nine recommendations aimed at addressing concerns that the transaction was not in the best interests of Canada. One of those recommendations was that the Board should have an equal number of representatives from Canada, the United Kingdom and Italy. The TMX and LSE simply stated they would review the recommendations.

And on June 24, we highlighted on our website that NDP Industry critic Peter Julian had said in the House of Commons, “Mr. Speaker, the London Stock Exchange is trying to take over the TMX to gain control of Canadian capital markets. New concerns are being raised throughout the country concerning the takeover of the TMX, including those voiced by the Premier of Quebec and by other provinces. Now more than ever we need a public consultation process. Why is the minister refusing to listen to the Canadian public? Why is he refusing to hold public hearings on this matter?”

Had the stock exchanges approved the takeover, the Council of Canadians was prepared for the next step in this process – ensuring that Industry minister Christian Paradis and various other Canadian regulators not give final approval to the deal.

It is also worth pointing out that in early June the Financial Post reported, “Xavier Rolet, the chief executive of the London Stock Exchange Group, says Canada’s free trade negotiations with Europe ‘could suffer’ as a result of the Canadian bank-led counter-proposal to his friendly deal to merge with Toronto Stock exchange owner TMX Group Inc. ‘Brussels does not see some of the recent rhetoric very favourably when you’re negotiating a free trade agreement,’ Mr. Rolet said… ‘It does look on the other side (of the Atlantic) a bit odd, if I may say,’ he added, noting there is ‘a significant financial services component’ to the long-running free trade talks with the European Union…”

This afternoon’s Toronto Star report notes, “The termination is a victory for rival TMX bidder, Maple Group Acquisition Corp., a bank-led consortium that argued Canada’s financial interests were better served by a Canadian owned stock exchange. The TMX said it would now focus its energies on pursuing other growth objectives and would review Maple Group’s offer.”