Maple And TMX To Begin Merger Discussions
Wednesday, July 27, 2011

Less than month after its merger deal with the London Stock Exchange Group (LSEG) collapsed, the TMX Group has agreed to hold talks with the Maple consortium to discuss the latter's takeover bid.

According to Maple, it has entered in to a Mutual Confidentiality Agreement with TMX, which provides for confidential discussions regarding Maple's offer for all the outstanding common shares of TMX. Were Maple's offer to be accepted by TMX and the deal approved, TMX shares would be exchanged for CAD40 in cash, plus 0.3016 of a share of Maple. According to the consortium, this values the deal at CAD3.8bn (USD4bn).

TMX had been due to enter into a merger transaction with the LSEG, but when it became apparent that the required level of shareholder approval would not be achieved, the deal was scrapped. The TMX Board of Directors had been a key advocate of the merger, and on numerous occasions rejected Maple's counter offer. This was done on the grounds that Maple's offer did not constitute a superior bid to LSEG's, nor could it be expected to do so in future. In spite of this, TMX's CEO Tom Kloet conceded that, in the wake of the LSEG deal failure, the board would consider its options, including Maple's proposals.

Speaking on behalf of Maple, Luc Bertrand said: “We look forward to engaging in collaborative discussions with TMX Group. While there can be no assurance that these discussions will ultimately lead to a TMX Group Board-supported transaction, the signing of this agreement and the commencement of discussions is a positive step.”

In a separate statement, TMX announced that the board had authorized management and its advisors to hold discussions with Maple. However, it still described the offer as unsolicited and stressed that the board makes no recommendation to shareholders regarding the offer. TMX also made clear that there can be no assurance that any agreement or recommendation will result from the discussions.

Maple was formed in reaction to the LSEG deal, by a group of pension funds and banks. It is composed of: Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), GMP Capital Inc., National Bank Financial Inc., Ontario Teachers' Pension Plan, Scotia Capital Inc., TD Securities Inc. and The Manufacturers Life Insurance Company.

The offer is open for acceptance until August 8.