The NDP is worried the Conservative government will rubber-stamp the deal between the London Stock Exchange and Toronto Stock Exchange operator if it's approved by shareholders and is calling for public consultations.
Opposition industry critic Peter Julian held a news conference Wednesday to outline NDP concerns about the LSE offer to buy TMX Group Inc., which is to be voted on by TMX shareholders on Thursday.
TMX and LSE describe the deal as a "merger of equals" but Julian said there's no doubt it's a "takeover," and one that is not in Canada's interest.
Julian said if shareholders vote to accept the deal, the Conservatives should exercise their authority to hold public hearings so that concerns can be aired in a transparent way.
"In our opinion, the NDP's opinion, this shouldn't lead to a quick rubber-stamping of approval by the industry minister and by the Conservative government," he said. "There is no other way to put it: it is a takeover of our capital markets. And so this decision must be taken with prudence and in a responsible way and certainly with public consultations."
Among the NDP's concerns are that a majority of shares in what would be a new company would be held outside of Canada and that only a handful of positions on its board of directors would be reserved for Canadians. Regional interests must also be considered, Julian said. TMX operates Montreal's and Toronto's stock exchanges and has operations right across the country. The premiers of Quebec and Ontario have both raised concerns about the stock exchanges leaving Canadian hands.
The NDP is raising the TMX-LSE issue this week because shareholders in TMX will be making a critical decision about who controls the company that owns Canada's largest stock exchange.
Another offer on table
LSE made its bid in February and shareholders are choosing whether to accept or reject it. The deadline for write-in votes was Tuesday evening, and officials will spend Wednesday counting those votes. On Thursday, more votes will be cast at the shareholder meeting.
Another offer on the table for TMX, from the Canadian consortium Maple Group, says that it will pay more per share than the LSE and that its offer values the TMX at $3.8 billion.
The TMX-LSE deal is valued at about $3.4 billion, based on the latest share prices.
Julian wouldn't comment on the Maple Group offer on Wednesday, or whether he agrees with some critics who say it would create a monopoly.
"For today, our concerns are primarily around what could be a rubber-stamping of a bid that we do not believe is in the national interest," he said.
He criticized the Conservatives for rejecting previous calls from the NDP for public hearings on the TMX-LSE merger and said by refusing, the government is sending a message of tacit approval for the deal.
The NDP wouldn't go so far as to say the LSE should be blocked from buying TMX. Julian would only say that public consultations should be held about any takeover of this "strategic asset."
"The offer that is on the table now is clearly not in the national interest," he said.
When the proposed merger was announced in February, Tony Clement — Christian Paradis's predecessor as industry minister — said it would be reviewed by the federal government to determine if it was acceptable under the Investment Canada Act.
According to the act, foreign investments of more than $299 million US are subject to a federal review to ensure they are of so-called "net benefit" to the country. Clement also indicated the provinces would have a say over whether the deal was "viable."
The MP said the Conservatives need to consider the ramifications if the merger goes ahead and should impose certain conditions. Among these conditions would be ensuring equal representation on the board of directors and protection for regional economic interests and emerging sectors, Julian said.