Business World

Friday 22 November 2019

Canadian heavyweights unite in attempt to block sale of country's main stock exchange

Doug Alexander

CANADIAN banks and pension funds have united in an effort to block a sale of the country's main stock exchange to the London Stock Exchange (LSE).

The Canadian group of businesses formed Maple Group Acquisition in an effort to stop the London company buying the Toronto Main Exchange (TMX).

The consortium says it will pay more than the current share price of TMX to keep it in Canadian hands.

In an interview, the Ontario state finance minister, Dwight Duncan, welcomed the proposal. He said the bid came from a group including Canada's biggest financial players.

The minister said Toronto-Dominion Bank; Bank of Nova Scotia; Canadian Imperial Bank of Commerce; National Bank of Canada; Alberta Investment Management Corp; Canada Pension Plan Investment Board; Caisse de Depot et Placement du Quebec; Ontario Teachers' Pension Plan; and Fonds de Solidarite FTQ were behind the plan.

It is the latest sign that nationalist concerns are increasing after a wave of stock exchange mergers in recent years.

An Ontario government committee reviewing the LSE-TMX deal said in April that a merger of TMX and the LSE should have an equal number of board seats in the combined entity.

The current bid gives LSE majority board control.

The committee said it had no power to impose its view on the sale. However, a takeover by the UK company requires approval from Canada's federal government and the Ontario Securities Commission.

The alternative Canadian offer "responds to a number of the concerns that I've raised about Canadian control", Mr Duncan said, adding: "It just shows that the Canadian financial services sector can play on the world stage."

A bid for the Sydney-based Australian Stock Exchange was withdrawn last October after the Singapore-based buyers failed to win Australian government support.

Even the New York Stock Exchange is not immune; it is in a deal to merge with German stock exchange, Deutsche Boerse.

"I'm sure nationalism will factor into people's thinking," said Shubha Khan, an analyst at National Bank Financial in Toronto.

"As far as government and regulators are concerned, the takeover of a Canadian exchange by Canadian institutions would be more palatable."

TMX confirmed it received an offer from Maple Group worth more than its share price.

Also in Business