No way, Rolet
INVESTORS SPURN LSE OVER ITS BID FOR TMX
THE London Stock Exchange’s global expansion plans were thrown into disarray yesterday as it was forced to abandon its £4.3bn bid to merge with Canada’s TMX Group.
The LSE scrapped the merger less than 24 hours before a crunch TMX shareholder vote, after early results showed it failed to win the critical two-thirds level of support required by Canadian law.
The shock announcement left Canadian rival bidder Maple Group in pole position to buy TMX and fuelled speculation that the LSE was now a takeover target itself from a bidder such as US rival Nasdaq.
“It’s a big blow for the LSE and its ambitions to create a global exchange,” Will Rhode, senior analyst at research house Tabb Group told City A.M.
The LSE said a “majority” of proxy votes cast beforehand supported the deal but not enough to reach the threshold. Canadian reports said only 54 per cent of the 70 per cent of proxy votes placed had approved the deal.
LSE chief executive Xavier Rolet (pictured) said he was “clearly disappointed” the threshold was not met.
Maple, which holds seven per cent of TMX shares, proved critical to the vote’s failure.
“We weren’t really overly surprised,” Mike Bignell, chief executive of Canadian trading platform Omega ATS, told City A.M. “If you look at the firepower of the Maple Group and its support from Canadian banks and pension funds it would have been very difficult for the LSE to have got the approval needed.”
Maple’s head, Luc Bertrand, said the group would “diligently pursue” the regulatory approvals needed to buy TMX.
But the deal’s failure throws open the field for control of the world’s biggest trading platforms. Nasdaq shares jumped four per cent as traders bet it may bid for the LSE.
“Investors have bought into LSE stock recently in the belief the TMX bid will fail and the LSE will end up on the block,” said Simon Maughan, an analyst at broker MF Global.
Others voiced concern. “Canada ought to look at what kind of message it’s sending out to the international market,” said Renee Colyer, head of Canadian research house Forefactor.