Maple Group Acquisition Corp. extended its $3.8-billion acquisition bid for Toronto-based TMX Group Inc. (TSX:X) for the eighth time on Thursday. But this time the consortium is close to securing approval from the provincial regulatory bodies to complete the transaction, said Luc Bertrand, Maple’s spokesman and vice chairman of National Bank of Canada.
The proposed deal has now been extended to July 31 and Maple is “proceeding with the goal to close by this date, if not earlier,” said Bertrand, who spoke at the Empire Club of Canada in Toronto on Thursday about Maple’s vision for the TMX. And while he noted that Maple’s focus is on completing the acquisition by that date, he did warn that “TMX is a public company and everyone has the responsibility to complete the work on time … this can’t go on and on because it’s not fair to shareholders.”
Furthermore, Bertrand noted, there has been no groundswell of opposition to the deal. Most people who had concerns have since had a chance to study the Ontario Securities Commission’s recognition orders and now realize that “the safeguards that are there for all participants are very significant.”
In particular, he pointed to the rule that no single entity will be allowed to own more than 10% of the new corporation — the same restriction that applies to the TMX today. As well, Bertrand noted, “Maple will have a 17-person board with at least 10 being independent and eight unrelated to the original Maple shareholders. The independent dealer community will have board representation, and all operations will remain subject to the public-interest mandate.
“There will be binding commitments to fair and reasonable fees,” Bertrand continued, “with no two-tier pricing for clearing, settlement or depository services. [And] assuming volumes are consistent with [Canadian Depository for Securities Ltd.] management projections, Maple expects that on-exchange clearing fees will decrease by more than 50% by 2016 as compared with 2012 prices. Finally, access to clearing and settlement services is protected, no matter on which marketplace a trade is executed.”
Bertrand addressed recent concerns that the OSC’s recognition orders will create a so-called “regulated monopoly,” noting that “equities trading in Canada will remain very competitive, with the likes of Chi-X, Pure, Omega and other U.S.-based alternative trading systems, not to mention major U.S. exchanges such as Nasdaq and the New York Stock Exchange … The draft recognition orders also contain provisions to ensure market participants remain free to direct their trades to the most advantageous trading platforms, subject to compliance with securities regulations.”
With regard to areas of growth for the TMX under Maple, Bertrand noted that the organization will be in a significantly stronger position to look at opportunities in the exchange world under its new ownership. That said, he foresees that “there’s going to be a growing need of experience in the clearing, settlement and risk-management side of the business [in the years ahead] and this is one area in which the TMX will have very deep experience.”
The proposed Maple ownership group consists of the following 13 participants: Alberta Investment Management Corp., Caisse de dépôt et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Corp., Dundee Capital Markets Inc., Fonds de solidarité des travailleurs du Quebec (F.T.Q.), GMP Capital Inc., National Bank Financial of Canada, Ontario Teachers’ Pension Plan, Scotia Capital Inc., TD Securities Inc. and Manufacturers Life Insurance Co.