A group of Canadian banks and pension plans raised their offer for the owner of the Toronto Stock Exchange, intensifying a bidding war hours after London Stock Exchange Group agreed to pay a special dividend should its takeover of TMX Group succeed.
The group, Maple Group Acquisition Corp., said it would pay C$3.8 billion ($3.9 billion), or C$50 a share, for TMX, up from C$48 previously, according to a statement. LSE's per-share bid was valued at C$44.82. Both exchange operators agreed on Wednesday to also give TMX owners a special dividend of C$4 a share if the deal closes.
Maple's investors include the C$151.7 billion Caisse de Depot et Placement du Quebec, C$148.2 billion Canada Pension Plan Investment Board, C$100 billion Ontario Teachers' Pension Plan and C$69 billion Alberta Investment Management Corp., as well as Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, among others.
The prospective buyers sweetened their offers before shareholders of Canada's main bourse vote on the LSE proposal June 30. More than $30 billion of exchange takeovers have been announced globally since October as executives look for ways to boost revenue after competition and technology improvements cut profits from stock trading and share listing.
LSE-TMX needs approval from Canadian Industry Minister Christian Paradis, who is reviewing the deal to determine whether it provides a “net benefit” to the country, under rules governing foreign takeovers. The Maple bid wouldn't require Mr. Paradis' approval because it's not a foreign transaction, though it will face reviews by regulators and Canada's competition bureau, the group said in a June 13 presentation.
LSE and TMX agreed to pay special dividends of C$660 million in an attempt to win support for their merger and thwart the rival Maple bid. TMX shareholders would receive a cash dividend of C$4 a share from the combined company once the takeover is completed, while LSE shareholders will get 84.1 pence ($1.36) a share, the companies said Wednesday in statements.
“One of the key things we received from our shareholders was a message on the dividend rate,” TMX Group CEO Thomas Kloet said Wednesday in a telephone interview before Maple Group increased its bid.
Investors were concerned the transaction “would result in a net decrease of their dividend rate, and we listened to that and reacted to that,” he said.
TMX will review Maple Group's revised bid, the bourse said in a statement.