International expansion on the cards following success of deal first proposed more than a year ago
The takeover of TMX Group by a consortium of banks and pension funds has finally received shareholder support, opening the way for international expansion by the operator of Toronto Stock Exchange.
On Friday TMX Group said shareholders had overwhelmingly backed an offer of $50 a share by Maple Group for 80 percent of the exchange group. Maple immediately renamed itself TMX Group.
The takeover attempt began in May last year when Maple Group tried to block the friendly merger between TMX and the London Stock Exchange (LSE) by making its own counter-offer for the Canadian group.
TMX and the LSE scrapped their merger plans the following month after it became clear the deal would not receive enough support from Canadian shareholders, leaving the path clear for Maple Group to continue its pursuit.
Tom Kloet, the chief executive of TMX who will stay on as boss following Maple’s acquisition, has made clear his plans to build up the group as an international trading force.
‘Between the banks and pension funds, which have capital and which I know from my engagement with them are interested in the international expansion I want to bring to the institution, we are going to be uniquely positioned as an acquirer of other exchanges around the world,’ Kloet told Reuters in a June interview.
Although it has not commented publicly on the matter, TMX is reported to be in discussions to buy Direct Edge, the fourth-largest stock exchange in the US, which captures around 10 percent of daily equity trading volume.
The purchase would allow TMX to profit from the large amount of trading in Canadian equities that takes place south of the border, as well as give it a potential avenue to open a US listings business, according to press reports.
Maple’s bid is one of the few success stories in an industry that has seen many recent attempts at consolidation fail.
During 2011 regulators blocked proposed deals between the Australian Stock Exchange and Singapore Exchange (SGX), and between NYSE Euronext and Deutsche Börse. A hostile bid for NYSE Euronext by NASDAQ OMX and IntercontinentalExchange also failed to find regulatory approval.
Following this string of failed deals, exchange groups have been exploring new ways to work together. The LSE and SGX recently announced they would cross-list each other’s largest stocks in a move that would see some securities on the market for 15 hours a day.
