London Stock Exchange To Merge With Canada's TMX
Friday, February 11, 2011

The London Stock Exchange (LSE) Group and the TMX Group, that operates the Toronto Stock Exchange, have announced a merger which is being unanimously recommended by the boards of both companies.

The combined transatlantic group (LSE-TMX) will be jointly headquartered in London and Toronto and, it was said, will offer an international gateway, leading global pools of capital formation and liquidity together with a unique portfolio of highly complementary markets, products, technologies and services. The boards believe that “the merger is strategically compelling and will create a more diversified business with greater scale, scope, reach and efficiencies, generating substantial benefits for all stakeholders.”

It is intended to create a global listings hub, an international market for businesses of all sizes, from venture-funded companies, through small and medium enterprises (SMEs) to large global corporations.

It will be the leading listings venue in the world by number of total listings - over 6,700 companies with an aggregate market capitalisation of approximately GBP3.7 trillion (USD5.95 trillion); It will also be the number one listing venue for natural resources, mining, energy and clean technology companies; for international listings from emerging and growth markets; and for SMEs with approximately 3,600 combined listings providing deep expertise in supporting small-cap and early stage companies.

It will also provide a wide breadth of trading markets/platforms – over 20 across North America and Europe. They deal in cash equities, derivatives, fixed income and energy markets, with enhanced potential to develop new trading products and opportunities, supported by strong regional post-trade operations and information services.

The revenue benefits of the merger are expected to accrue from a variety of sources, including the facilitation of cross-listings and admissions for customers, the wider availability of products and services via the merged group's enhanced distribution and footprint, and the development of new products.

Commenting on the announcement of the merger, Chris Gibson-Smith, Chairman of London Stock Exchange Group plc stated: "We are today announcing the creation of a global leader in the exchange space. Building on our own shared long histories of excellence in capital markets, financial strength and cultures of internationally respected governance, I believe that together we will be able to offer shareholders and customers a business significantly greater than the sum of our parts. This merger comes at a hugely important time in the history of capital markets."

Wayne Fox, Chairman of TMX Group Inc. added: “It will have a positive impact on the business communities in Canada, the UK and Italy. I look forward to working with my fellow directors and the combined team to create one of the world's leading exchange groups."

The board of the merged group will consist of fifteen directors, eight to be nominated by LSE (of which it is envisaged three will be from Borsa Italiana), and seven to be nominated by TMX. The executive management and senior leadership will be drawn from a balance of leaders from both organizations and will be represented in its joint headquarters of London and Toronto, as well as other core centres, including Calgary, Colombo, Milan, Montreal, Rome and Vancouver.

Completion of the merger is subject to customary regulatory and other approvals, including approval by LSE and TMX shareholders. Each of LSE's and TMX's markets will continue to be regulated in accordance with local requirements by their existing regulators.