* Desjardins Financial, GMP Capital, Dundee Capital named
* One other Canadian firm also may join in $3.7 bln bid
* More Canadian firms would enhance Maple's credentials
* Announcement likely as early as Tuesday afternoon
(adds analyst comment)
By Pav Jordan and John McCrank
TORONTO, June 7 At least three financial
companies plan to join the Maple Group's $3.7 billion hostile
bid for TMX Group (X.TO), adding heft to an all-Canadian
alternative to the London Stock Exchange's friendly offer.
Desjardins Financial Group, GMP Capital Inc (GMP.TO),
Dundee Capital Markets (DCM.TO) could agree as early as Tuesday
to join the consortium challenging the LSE's (LSE.L) $3.5
billion bid for the the Toronto Stock Exchange operator, a
source familiar with the situation said on Tuesday.
"The Canadian financial sector is lining up behind the
Maple bid," said Laurence Booth, a professor of finance at the
University of Toronto's Rotman School of Business.
Bringing more Canadian partners into Maple would bolster
the credentials of a bid that its supporters say would preclude
the possibility of Canadian capital markets falling under
The source, who could not be named because of his company's
policy, said a fourth new firm may also join the Maple bid,
stressing that the agreements had not yet been finalized.
"There will be some new members announced later today,
maybe tomorrow," the source said.
FACTBOX-Key players in TMX battle [ID:nN02238198]
TIMELINE-TMX takeover battle http:/r.reuters.com/qez89r
Graphic of TMX market share http:/r.reuters.com/kyd89r
Maple Group's current members include four of the country's
biggest banks: National Bank of Canada, Canadian Imperial Bank
of Commerce (CM.TO), Bank of Nova Scotia (BNS.TO) and
Toronto-Dominion Bank (TD.TO).
Five pension funds have also signed on: Alberta Investment
Management Corp, Caisse de depot et placement du Quebec, Canada
Pension Plan Investment Board, Fonds de solidarite des
travailleurs du Quebec (FTQ) and Ontario Teachers' Pension Plan
BOTH BIDS FACE HURDLES
The Maple bid - which hinges partly on regulatory approval
of the acquisition of Alpha Group, an alternative stock trading
platform, and the CDS stock trade clearinghouse - faces review
by Canada's Competition Bureau.
All four banks and one of the pension funds involved in the
Maple bid are owners of Alpha, which competes with the Toronto
Bringing in more financial firms that are not owners of
Alpha and that want low transaction fees may help dispel the
antitrust concerns and enhance the prospects for Maple's
success, says Rotman School's Booth.
"When you've got the pension funds and other people that
are just interested in low transaction costs also coming out
and saying we agree with this, it sort of diffuses the
anti-competitive aspects of the Maple bid."
Still, opponents say Maple would have 80 percent of
Canadian stock trading by volume if its bid succeeds.
Maple Group has countered by saying ever-increasing
competition from U.S. exchanges on dual-listed stocks will hold
down trading costs for customers.
TMX shareholders are due to vote on the LSE proposal on
June 30, and shareholders who spoke to Reuters in a recent poll
signaled that the outcome was still uncertain. [ID:nN02266428]
"The developments in the Maple group are positive and add
credibility to the offer," said Ed Ditmire, an analyst at
Macquarie Research in New York.
"But TMX shareholders are still faced with a tremendous
amount of uncertainty when evaluating their choices ... until
they get more feedback from regulators, so they'll have to vote
their shares really in the dark in regards to that."
While Maple faces antitrust scrutiny, the LSE bid must
pass muster under the Investment Canada Act, which requires
foreign takeovers to carry a "net benefit" to Canada.
Provincial regulators also have a say, but those hurdles are
considered less onerous.
Alison Crosthwait, director of global trading strategy at
Instinet, said the new additions to the consortium may not sway
sceptical shareholders because the Maple bid is already as
Canadian as it can get.
"It certainly doesn't hurt their deal, but it doesn't make
me say, 'oh, now Canada is on board,'" said Crosthwait, whose
company operates Chi-X, Canada's second-largest alternative
(Reporting by Pav Jordan and John McCrank; editing by