Rival bidder may scupper LSE merger

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The Independent Online

A rival bidder was today poised to scupper a £4 billion merger deal between the London Stock Exchange and its Toronto counterpart.

Maple Group, which is made up of Canadian pension funds and banks, has tabled a £1.8 billion bid proposal for TMX Group in a move which would keep the owner of the Toronto stock exchange in Canadian hands.

The LSE unveiled its merger with TMX in February as part of chief executive Xavier Rolet's desire to play a central role in the consolidation of international stock exchanges. However the deal has drawn opposition in Canada amid concerns its biggest exchange will be dominated by foreign interests.

TMX has said it will assess the higher offer from Maple but that in the meantime it remained committed to its existing merger partner.

The failure of the LSE to complete the deal could make it a bid target as exchanges look to slash costs and attract the biggest company listings.

Germany's Deutsche Borse agreed in February to buy NYSE Euronext, but the deal is subject to a counterbid from Nasdaq OMX and IntercontinentalExchange. And the Australian government recently blocked Singapore's takeover bid for its bourse on national interest grounds.

The LSE's deal with Canada's TMX would create one of the world's biggest trading platforms, with the new business becoming a dominant player for mining company listings at a time of strong commodity prices.

It is set to have its headquarters in both London and Toronto with Mr Rolet continuing in his current role for the merged group. While the combination has been presented as a merger of equals, existing LSE shareholders will hold 55% of the enlarged business.

On Friday, the LSE announced a profits rise of 65% to £268 million in the year to March.

It revealed it has spent £15 million so far on the merger with the Toronto exchange, but gave no firm indication when it would complete the deal. "Work is ongoing to secure the necessary approvals," it added.