May 21 (Bloomberg) -- TMX Group Inc. said just because a group of Canadian banks and pension funds is offering more to acquire it than London Stock Exchange Group Plc, it doesn’t make their proposal superior.
The Toronto Stock Exchange owner rejected an unsolicited bid from Maple Group Acquisition Corp. yesterday, affirming its friendly agreement with the LSE parent.Maple’s plan “is a different proposal in that it does require a change of control as opposed to our current merger agreement with LSE Group, which is a combination of the holding company whereby our shareholders continue to share in the growth of the company,” Thomas Kloet said yesterday in a telephone interview.The C$3.6 billion ($3.7 billion) proposal from Maple, a group of four Canadian banks and five pension funds, would also result in too much debt, TMX said in a statement. The company estimated an acquisition would boost its debt to 2.9 times 12- month earnings before interest, taxes, depreciation and amortization, from 1.1 now.The leverage “generates much, if not all, of the earnings accretion referenced in the Maple proposal and could constrain TMX Group’s ability to execute and implement strategic opportunities,” TMX said in the statement.Luc Bertrand, vice chairman of National Bank of Canada and a spokesman for Maple Group, said, “we are disappointed the TMX board has decided not to engage in discussions with respect to our clearly superior proposal.”The group will “determine” its next steps, according to a statement yesterday.Exchange AcquisitionsLSE’s bid for TMX was part of about $30 billion in takeover offers for exchanges globally in less than six months, as bourses try to cut costs and generate more revenue from trading in stocks, options and futures. Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. dropped an unsolicited attempt to buy NYSE Euronext, owner of the New York Stock Exchange, on May 16 after battling with Frankfurt-based Deutsche Boerse AG.Maple offered on May 13 to buy TMX for cash and stock valued at about C$48 a share. LSE’s Feb. 9 agreement would give TMX shareholders 2.9963 LSE shares for each TMX share. LSE investors would own 55 percent of the company, while TMX shareholders would hold the rest.In comparison, under the Maple plan, TMX shareholders would get C$33.52 in cash plus 0.3016 of a Maple share for each TMX share. The group, which was created for this bid, would pay as much as C$2.5 billion in cash under the proposal, which is priced about 15 percent higher than the LSE offer.Alpha GroupMaple also said it aims to acquire Alpha Group, a bank- owned operator of an alternative trading system that competes with TMX, and Canadian securities clearing house CDS Inc. after completing a takeover of the Toronto Stock Exchange owner.LSE needs approval from Canada’s federal government as well as provincial securities regulators and two-thirds of shareholders. LSE and TMX submitted their application to Canada’s federal government on April 29. The country’s industry minister has 45 days, with a potential 30-day extension, to review the application to determine whether the transaction is a “net benefit” to the country.The Maple bid wouldn’t require Industry Canada approval because it’s not a foreign transaction, though it would face reviews by regulators and Canada’s competition bureau, the group said in a May 16 presentation.TMX also said today that Maple has provided “inadequate information” about its plans for TMX and that it carries the risk that regulators will reject integrating Alpha Group, a bank-owned trading system that competes with TMX, and CDS Inc., Canada’s clearinghouse for equities, into TMX.--Editors: Chris Nagi, Steven Frank.
TO contact the reporters on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net; Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Nick Baker at nbaker7@bloomberg.net.
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