Montreal Exchange Inc. and TSX Group Inc. today announced that they have agreed to combine their organizations to create TMX Group Inc.

“This combination grows out of a common vision for the future of the Canadian capital markets,” stated Richard Nesbitt, CEO of TSX Group. Luc Bertrand, president and CEO of MX continued, “The new group will redefine the Canadian capital markets and strengthen its global positioning. TMX Group will list, trade, clear and offer market data for both cash and derivatives markets across multiple asset classes.”

The head office of TMX Group will be located in Toronto. The board of directors, with 18 members initially, will be chaired by Wayne Fox, the current chair of TSX Group. It will include five MX designated board members, including Bertrand. The agreement requires that 25% of the directors of TMX Group be residents of Quebec.

The head office of MX and the derivatives trading and related product operations will remain in Montreal. The Canadian Derivatives Clearing Corp. will expand its clearing mandate and continue to have its head office in Montreal. MX will also continue to manage the Montreal Climate Exchange as it develops into a leading market for exchange traded environmental products in Canada. The Autorité des marchés financiers (AMF) will continue as the lead regulator for MX’s operations. TMX Group will remain subject to a 10% ownership restriction, amendments to which will require the approval of each of the AMF and the Ontario Securities Commission.

Under the terms of the agreement, Nesbitt will be the CEO and Bertrand will be the deputy CEO of TMX Group. Bertrand will continue in his role as president and CEO of MX. He will also assume responsibility for information technology of the TMX Group.

“The MX Board of Directors has approved entering into this transaction and recommends that MX shareholders vote in favour of the combination,” said Jean Turmel, chairman of the Montreal Exchange.

MX and TSX Group have entered into a combination agreement through which TSX Group will indirectly acquire all of MX’s outstanding common shares for total consideration of 15.3 million TSX Group common shares and $428 million in cash.

MX shareholders will receive, at the election of each holder: 0.7784 of a common share of TSX Group (the equivalent of $39.00 as at the market close on November 28, being the last business day prior to the confirmation of combination discussions by both companies); or $39.00 in cash, for each common share of MX, subject in each case, to proration.


After the effect of full proration, each MX shareholder will be entitled to receive 0.5 of a common share of TSX Group and $13.95 in cash.

Those directors and officers of MX who hold approximately 7% of MX common shares outstanding, have irrevocably agreed to vote their shares in favour of the amalgamation.

The amalgamation is expected to close in the first quarter of 2008. At the time of its next annual shareholders’ meeting, TSX Group Inc. will propose changing its name to TMX Group Inc.

MX has agreed to pay TSX a termination fee of $46 million in certain circumstances if the amalgamation is not completed.

BMO Capital Markets and Desjardins Securities acted as financial advisors to TSX Group.