June 23 London Stock Exchange (LSE.L) faces a
nail-biting fight for Canadian peer TMX Group (X.TO) after
rival bidder Maple trumped the LSE's sweetened offer with
counterbid worth C$3.8 billion ($3.9 billion).
Here is a compilation of shareholder and analyst comments
regarding the two deals.
CHRIS DAMAS, INDEPENDENT ANALYST AND SHAREHOLDER
The LSE still has an opportunity to bring in someone with
deeper pockets and I really think they want this. They need an
external capital at this point. I don't think they have the
firepower with their balance sheet. They tried leveraging up
with the special dividend, but it didn't work. What really
counts now is cash. I don't think people are buying into the
vision as much as they'd hoped.
A key weakness the TMX-LSE merger deal has is that anything
they do for the Canadians, they seem to have to do for London.
We haven't heard anything about those major (LSE)
shareholders -- what they want, what they think. Are they
passive? ... Who knows what kinds of pressure there is from
THOMAS CALDWELL, CHAIRMAN OF CALDWELL SECURITIES
On a cash basis, Maple appears to have the higher ground.
From a strategic standpoint, LSE is superior.
I don't know that (LSE) can (raise the bid), because they
are running into pressures on the UK side -- they're saying,
"Listen, how come we're giving these colonials such a great
deal over there? We're the London Stock Exchange." So, there is
a wall at some point.
As Wellington said at the battle of Waterloo, "It was a
close run thing."
My objections to Maple would be significantly less if the
whole cartel would agree to bring the percentage down to say,
45 percent, in total, over time. The independence of markets is
MATHIEU ROY, VICE-PRESIDENT, PORTFOLIO MANAGER, LOUISBOURG
I think that (LSE) would have to do something more if they
want to feel good about winning. I believe the Maple sweetener
is good -- not so much for the extra C$2.00 per share but more
for the move to offer 80 percent of the price in cash (from 70
percent). It makes their bid "firmer", with C$40 of the C$50
available in cash. The LSE-TMX merger is paper in nature.
There's uncertainty on how the group would trade assuming it
ALISON CROSTHWAIT, GLOBAL TRADING STRATEGY ANALYST,
At this point, they're only hurting each other if they
continue to one-up each other -- in the sense, from a game
perspective or a strategy perspective. They're now basically
where they were before: Maple has a slightly better bid
financially than the LSE does.
What surprises me is that, increasingly, I'm hearing a
little bit of, "Perhaps, neither of the bids will happen." It
is possible neither of them will happen ... So there's still
risk in this.
I don't think they can do this again, because they'll just
end up where they are right now, which is with higher bids and
no relative difference ... I think this has to come down to
shareholders accepting the regulatory risk, accepting the
future growth potential and deciding what is the better deal
they want to go with.
I have never fully understood the value proposition of the
Maple deal. And I continue to feel that the Maple deal is more
protectionist than pro-actively value-creating.
CHRIS ALLEN, NEW YORK-BASED EXCHANGES ANALYST AT EVERCORE
You have the whole financial community in Canada on one
side or the other -- the majority is on Maple but the other
major players are on the TMX side -- and obviously it's a
political issue. So I think it's a low probability that another
exchange would want to stick its nose in there right now. It's
complicated with a lot of moving parts and a lot of players
involved at the end of the day.
If an exchange was thinking about doing something they'd be
more apt to sit on the sidelines and look at how the whole
thing plays out and see where the cards lie.
MICHAEL SMEDLEY, CEO OF MORGAN MEIGHEN & ASSOCIATES
It would seem incongruous that there would be a positive
vote for the merging on the 30th, because if it were, it would
end the process.
The directors of the exchange can surely find a way of
deferring the final decision if it seems called for by the
I think, financially, you are dealing with the financial
essence of this country -- they could pay anything within
It would seem that Maple has an advantage in the type of
regulatory considerations in its direction.
It would seem much healthier to continue to hold direct
shares of the TMX and put some reliance on the financial
strength and ingenuity of the Canadian financial community to
drive the exchange forward.
RICHARD FOGLER, PRESIDENT, KINGWEST & CO
I told them (LSE) they'd better bump the price or get off
I think they've (LSE) got two things two do: give up and go
home, or make a seriously increased offer.
What's going to have to happen is that the joint offer is
going to have to make an offer to the TMX independent of the
If they keep inching up by a couple of bucks, it'll be like
a silly auction where people are paying no attention because
it's a small thing. I think they have to make one rather large
step up to put some pressure on the Maple Group.
I will not decide how I will vote until these guys are
finished their games.
If the LSE wants to win, they have to change their price.
GAVIN GRAHAM, PRESIDENT OF GRAHAM INVESTMENT STRATEGY
On TMX share price movement:
Evidently people are continuing to anticipate there will be
further moves but probably you're seeing with the C$4 special
dividend from the LSE group and by Maple raising its bid,
that's probably most of the action until we see what the
outcome of the vote on the 30th of June is.
You don't know whether the LSE bid is going to go through,
will be voted in favor of, and you don't know what the totality
of the Maple bid is worth.
(Reporting by John McCrank, Solarina Ho, Trish Nixon, Claire
Sibonney; editing by Rob Wilson and Peter Galloway)