London Stock Exchange Group scrapped its bid for TMX Group after it failed to win shareholder support, opening the door for a competing bid from a group of banks and pension funds trying to keep Canada’s main stock exchange in local hands.
The London and Toronto exchanges said they won’t proceed with the friendly C$3.29 billion (US$3.4 billion) merger because they didn’t get the required two-thirds votes cast by proxy ahead of Thursday’s shareholder meeting, according to a statement Wednesday.
The LSE termination paves the way for a rival bid from a group of Canadian banks and pension funds to buy the Toronto Stock Exchange owner. TMX on June 24 called the London offer “superior” and gave no recommendation on the proposal from Maple Group Acquisition Corp. TMX said on Wednesday it will continue to review the Maple offer.
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, National Bank of Canada and Canadian Imperial Bank of Commerce, among others.
“We are clearly disappointed that despite a majority of both LSEG and TMX Group shareholders voting for our recommended merger, the two-thirds approval threshold for TMX Group shareholders was not met,” LSE CEO Xavier Rolet said in a statement.
“We hope we may now engage in a positive dialogue with the TMX Group board,” the Maple Group said in a statement. “We genuinely believe Maple’s vision represents the best way forward for TMX Group and the Canadian capital markets.”
Maple Group spent the last five weeks urging TMX shareholders to reject the LSE bid and consider its C$3.73 billion unsolicited offer. It required TMX shareholders to reject the London offer for its bid to proceed. The Maple Group offer, which expires Aug. 8, would require approvals from Canada’s competition bureau and provincial regulators in Ontario and Quebec.
TMX, which was advised by banks, including BMO Capital Markets, must pay a breakup fee of C$10 million to LSE as part of the merger agreement. LSE was advised by RBC Capital Markets, among other banks.
Luc Bertrand, a National Bank of Canada vice chairman and spokesman for Maple Group, didn’t return a call seeking comment. TMX spokeswoman Carolyn Quick didn’t immediately return telephone and e-mail messages seeing comment.
