TMX board backs $3.8B Maple Group takeover bid

TMX Group's board of directors decides to support a $3.8-billion takeover bid from Maple Group Acquisition Corp.

TMX Group's board of directors has decided to support a $3.8 billion takeover bid that will see the owner of Canada's stock markets acquired by a group of banks, insurance companies and pension funds.

TMX chairman Wayne Fox said in a statement late Sunday that Maple offer "is in the best interests" of the company and its shareholders.

He advised shareholders to accept the Maple proposal and said the two sides will work to ensure it is approved by Canadian securities regulators and the federal Competition Bureau.

After months of talks on the deal, Fox said the two companies "reached agreement on the strategic direction of the company and addressed issues we had previously identified to the satisfaction of both parties."

The future of the TMX has been a major issue not only on Bay Street but also in Ottawa, where an earlier deal that would have seen the company acquired by the London Stock Exchange raised fears that Canada's stock markets would come under foreign control.

The LSE bid eventually failed as shareholders rejected the offer in the wake of the Maple Group rival bid.

The TMX board's backing of the Maple Group takeover comes after the TMX initially sought a merger with the London Stock Exchange. (Aaron Vincent Elkaim/Canadian Press)

Tom Kloet, TMX Group's CEO, said the now friendly merger will help Canada's stock markets expand and grow.

"TMX Group is the cornerstone of Canada's capital markets and an important catalyst for national economic activity, capital formation and foreign investment," Kloet said.

"This is a unique opportunity to create an integrated exchange and clearing group that can provide efficiencies and new capabilities for the benefit of all market participants.  Further, the investment in our company by leading Canadian pension funds and financial institutions will contribute to the success of our business and will strengthen our ability to compete and grow in the highly competitive global exchange sector."

Luc Bertrand, head of the Maple Group and a National Bank of Canada senior executive, agreed the deal will help TMX grow its business in Canada and abroad.

"The combined company will be well-positioned to pursue growth opportunities through innovative new products and services, expanded distribution and international acquisitions or joint ventures," he said.

Bertrand, who was once head of the Montreal Stock Exchange, said Maple Group is confident it can get regulatory approval for the deal by early next year.

The Maple Group is a consortium of financial companies and pension funds and had been in talks with the TMX since last summer.

Backing of the takeover from the TMX board comes after the TMX initially sought a merger with the London Stock Exchange.

But that friendly merger was called off earlier this year because there was not enough TMX shareholder support in the face of the richer Maple bid.

TMX owns the Toronto Stock Exchange and the junior TSX Venture market as well as the Montreal Stock Exchange.

Maple Group investors include the Alberta Investment Management Corp., Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets, Desjardins Financial, Dundee Capital Markets, Fonds de solidarite des travailleurs du Quebec, GMP Capital, National Bank Financial, Ontario Teachers' Pension Plan, Scotia Capital, TD Securities and Manulife.