Maple turns hostile in bid for Toronto exchange

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The Independent Online

The consortium of Canadian financial firms bidding for the Toronto Stock Exchange has called on investors to reject the rival merger plan with the London Stock Exchange in a crunch vote at the end of this month.

The consortium, called Maple Group, formally went hostile in its C$3.7bn (£2.3bn) bid for the Toronto exchange's parent company, TMX, yesterday, saying its offer gave shareholders cash now and higher dividends in the future than the LSE merger plan.

And it set out a range of measures to reassure investors who have been concerned about conflicts of interest at Maple. It said it would create an independent committee to work out the financial details of its plan to merge TMX with Canada's second-largest exchange, Alpha, and its biggest clearing house, CDS, two companies largely owned by members of the Maple consortium.

"We provide a significant premium and 70 per cent cash consideration, whereas the LSE provides neither a meaningful premium nor cash," Maple's chief executive, Luc Bertrand, said on a conference call with investors. "The LSE takeover makes promises, but provides no clear growth strategy."

Last night TMX said it would review Maple's circular and respond on a timely basis. But it noted that it had concluded that May's offer was not a "superior proposal" to its deal with the LSE. TMX shareholders are scheduled to vote on the LSE deal on 30 June.

The companies agreed their merger in February, saying it would create a giant share trading venue with 6,700 companies listed on its stock exchanges, including the LSE-owned Borsa Italiana. The deal would give the Canadian company's shareholders 45 per cent of the combined group.

Maple, whose 13 members own 6.6 per cent of TMX, launched its rival bid in May, and appealed to nationalist sentiment in Canada with its pitch to keep ownership of the Toronto exchange in the country. It faces competition hurdles, though, over its plan to merge TMX with Alpha and CDS.