* Maple's circular expected to be released any time
* Document would formally start hostile bid for TMX
* Maple may raise its offer, detail Alpha and CDS values
By Pav Jordan
TORONTO, June 9 The Maple Group consortium of
Canadian banks and pension funds chasing a hostile takeover of
TMX Group (X.TO) is preparing its formal pitch to convince
shareholders its offer is the best one on the table.
The group is expected to take its bid directly to
shareholders by means of a circular outlining its $3.7 billion
cash and stock offer. It's competing against a friendly, $3.5
billion offer by the London Stock Exchange Group (LSE.L) that
TMX's management supports.
"The circular will be an opportunity for the group to
explain to the shareholders what we are trying to achieve,"
said a Maple Group source, who spoke on condition of anonymity
because the circular has not yet been released.
The window of opportunity for Maple to win over
shareholders to its side before they vote is closing. On June
30 TMX investors will vote the LSE's all-stock bid. Maple's
circular, which is expected any time now, is likely its best,
last chance to carry the day.
An exclusive Reuters poll earlier this week showed
shareholders have yet to rally around either bid, meaning that
the spoils will likely go to the suitor who does the best sales
Maple's headline offer of C$48 a share, comprising C$33.52
in cash plus 0.3016 of a Maple share for each TMX share,
appears superior to the LSE's all-stock bid.
The LSE bid was valued closer to $3 billion when it was
made Feb. 9 but has risen with LSE shares, reflecting investor
opinion that a deal may not go through.
Maple's bid hinges partly on regulatory approval of the
acquisition of Alpha, Canada's No. 1 alternative trading
system, and the CDS stock trade clearinghouse. The two
privately held companies have no clear valuations, and the
Maple circular is likely to fill in at least some of the
Along with the Toronto Stock Exchange, TMX Group owns the
TSX Venture Exchange for small-cap companies and the Montreal
Exchange, Canada's main derivatives bourse.
FACTBOX-Key players in TMX takeover battle [ID:nN02238198]
TIMELINE-Battle to take over TMX Group
Maple would control more than 80 percent of Canadian stock
trading by volume if it succeeds, raising competition
But one of its main selling points is it would keep control
of Canadian capital markets in the hands of Canadian financial
institutions. Critics say the LSE deal would put London at the
Analysts say the circular is likely to play up the
all-Canadian cast of the bid while playing down the impact of
its dominance over domestic stock trading.
"This document, if it does what I think it's going to do
and what I hope it's going to do, will detail some of the plans
for this newly owned TMX Group," said Alison Crosthwait,
director of global trading strategy at Instinet, which operates
Canada's second-largest alternative trading system Chi-X.
"So cost savings, growth plans, what they plan to do with
CDS and Alpha and how they are valuing those combinations or
POSSIBLE NEW MAPLE MEMBERS
The LSE and TMX have broadcast their message that a
combination of the exchanges would create a $7 billion
transatlantic exchange and a powerhouse in mining and resource
equities doing $4 trillion in annual trading.
Opponents to the deal - including the four banks behind the
Maple Bid - Toronto Dominion Bank, Canadian Imperial Bank of
Commerce, National Bank of Canada and Bank of Nova Scotia - say
it would hurt Toronto's ambitions to become a global financial
services hub as control shifts to London.
The circular could also announce that at least three if not
four more Canadian financial firms will join Maple, bolstering
its all-Canadian appeal.
"They've got a good plan in principle and now they need to
get granular and say, 'how can we actually make this work,"
"I think really what everybody wants to know is, what is
the present value of the deal, not just the value of the stock,
but for the future prospects of holding that stock, and that is
what the shareholders want to know."
(Editing by Frank McGurty)