Maple bid for TMX wins shareholder approval

TORONTO Tue Jul 31, 2012 11:09pm EDT

TMX Group Inc. Chief Executive Officer Thomas Kloet laughs before the annual general meeting of shareholders in Toronto May 11, 2012. REUTERS/ Mike Cassese

TMX Group Inc. Chief Executive Officer Thomas Kloet laughs before the annual general meeting of shareholders in Toronto May 11, 2012.

Credit: Reuters/ Mike Cassese

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TORONTO (Reuters) - The takeover of Canadian stock market operator TMX Group (X.TO) by a group of financial institutions has been approved by TMX's shareholders, bringing all of Canada's main securities exchanges under a single umbrella.

The approval of the C$3.8 billion ($3.8 billion) bid creates a new entity that combines the Toronto Stock Exchange with its main rival, Alpha. It also folds in the Canadian Depository for Securities, which clears and settles all stock trades in Canada.

Maple Group's C$50-a-share offer secured final regulatory approvals just weeks ago, paving the way for the final go-ahead. Over 90 percent of TMX's shares were tendered by shareholders in support of the deal, the companies said late on Tuesday.

"TMX Group is pleased with today's outcome," said TMX Chief Executive Tom Kloet, who will remain CEO of the combined entity.

TMX agreed to back Maple's bid last October, after initially rejecting an unsolicited offer that the banks and their partners put together to scupper a friendly deal that was struck earlier with the London Stock Exchange (LSE.L).

Maple touted its proposal as the best way to keep Canadian exchanges out of foreign hands, having unveiled the deal amid a wave of foreign firms launching bids for global rivals in the exchanges sector.

The group, a consortium that includes some of Canada's top banks, pension funds and insurers, said the level of shareholder support well exceeded the minimum 70 percent approval needed for the takeover to proceed.

Maple and TMX in a joint statement said the acquisitions of CDS and Alpha would close on Wednesday.

NEW BOARD

The companies said a new board has been appointed for Maple, TMX Group and its principal subsidiaries. Chuck Winograd, who is the former head of RBC Capital Markets, will serve as chairman of the new board.

The new board of the combined company, which will be renamed TMX Group Ltd on August 10, will include representatives of some of Maple's members among others.

The other members of the board will be Luc Bertrand, Denyse Chicoyne, Marie Giguère, George Gosbee, William Hatanaka, Harry Jaako, William Linton, Jean Martel, William Royan, Tom Woods, Anthony Walsh, Gerri Sinclair, Kevin Sullivan and Eric Wetlaufer, the companies said.

Following the deal, TMX will control some 85 percent of Canadian stock trading, adding Alpha's near 20-percent share to the 65 percent already held by its own exchanges, including the Toronto Stock Exchange and junior TSX Venture Exchange.

The larger entity will have the mass to be an acquirer in the ongoing consolidation of exchanges, rather than the target it was when LSE launched its bid last year.

Already, TMX has been in talks to buy Direct Edge Holdings LLC, the No. 4 U.S. stock exchange, for up to $500 million, people familiar with the matter said.

COMPLEX DEAL

Shares of TMX will continue to be listed on the TSX after the close of the deal, as it was never Maple's intention to take the company completely private. Maple's shareholders will retain majority control, while a percentage of TMX's stock will remain in free float.

Maple's offer required between 70 percent to 80 percent of TMX's shares to be tendered toward the deal. In a filing with regulators earlier in July, Maple said that if the maximum 80 percent of shares are acquired for cash under the offer, former shareholders will own a roughly 28 percent interest in the new entity.

The offer will remain open until the close of business on August 10 for shareholders, who have not yet tendered shares, to indicate whether they would rather receive cash or shares in the new entity.

TMX shares closed at C$49.50 on Tuesday, just shy of Maple's C$50 a share offer. The news of the approval was released after markets closed in Canada.

($1 = 1.0023 Canadian dollars)

(Additional reporting by Jennifer Kwan and Cameron French; Editing by Eric Meijer)

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