* TMX says will review opportunities, including Maple offer
* TMX could not achieve 2/3 threshold needed for LSE deal
* TMX shares rise as high as C$44.80 after LSE deal dies
(Recasts with details, closing TMX share price)
By Pav Jordan and Luke Jeffs
TORONTO/LONDON, June 29 The London Stock
Exchange's C$3.6 billion plan to buy its Toronto counterpart
collapsed on Wednesday in the face of a competing bid led by
Canadian banks, leaving the UK exchange itself vulnerable to
The failure, which follows Singapore Exchange Ltd.'s
(SGXL.SI) scuttled bid for Australia's ASX Ltd (ASX.AX), is the
latest sign of nationalist pride frustrating cross-border deals
for highly symbolic capital markets.
The failed bid from LSE (LSE.L) opens the door to a hostile
C$3.8 billion offer for TMX Group (X.TO), operator of the
Toronto Stock Exchange, from the Maple Group consortium. The
consortium bid is a made-in-Canada alternative to a takeover
that would have put a big domestic asset in foreign hands.
"This is a group of Canadians, businesses that came
together and have asserted themselves," said Dwight Duncan, the
province of Ontario's finance minister and an early opponent of
the LSE deal.
In having to retreat from Canada, the LSE also draws
attention to itself as a takeover target as exchanges
consolidate to try to grow and broaden geographic reach, and to
fight off rivals and new market entrants.
Nasdaq OMX Group (NDAQ.O), smarting from its own failure in
the United States to buy New York Stock Exchange parent NYSE
Euronext NYX.N, could be a contender for an alternative
transatlantic combination with the LSE.
"While the failed deal probably puts an end to TMX's M&A
ambitions, other exchange operators will likely continue to
look for partners. This reinforces my belief that we should
expect more mergers, not less," said Ed Ditmire, New York-based
analyst for Macquarie Securities.
Nasdaq and LSE shares rose in late trade on Wednesday,
indicating that speculation about a tie-up could be brewing.
"It would not surprise me to see Nasdaq and LSE talking,"
said Jamie Selway, New York-based market structure expert and
managing director of strategy at Investment Technology Group.
TAKE A LOOK: LSE, Maple battle for TMX [ID:nL6E7HN2A3]
Graphic of TMX market share r.reuters.com/kyd89r
How LSE, Maple bids stack up r.reuters.com/vys32s
Global exchanges map r.reuters.com/hav32s
The TMX deal's collapse is a black eye for LSE Chief
Executive Xavier Rolet, who banked his reputation on sealing
Rolet was to have led a LSE-TMX exchange group, which would
have been a heavyweight global player and No. 1 in listing
energy and mining companies.
But the support he got from TMX's management and board
wasn't enough to overcome opposition from within Canada's
tight-knit banking sector.
Four of the country's biggest banks were the lead players
in the bid from Maple, a consortium that also included pension
funds and financial services firms. Canada's other two big
banks were advisers to the LSE proposal.
NOT ENOUGH VOTES
In brief statements issued one day before a shareholder
vote, the two exchanges said they realized from an early tally
of proxy votes that TMX shareholders would not give them the
two-thirds majority needed to approve their friendly deal.
TMX Group said it would now review opportunities, including
the Maple offer.
"LSE and TMX were both in positions where they weren't
quite big enough or diverse and fast-growing enough to control
their own destiny," said Justin Schack, managing director of
market structure analysis at New York-based agency brokerage
"They did the best deal that they probably could. Now that
that's not going to happen TMX has Maple to deal with, while
LSE is out on its own again, and there aren't many partners out
there where they could be the acquirer rather than the
Maple has offered C$3.8 billion for TMX, mostly in cash.
LSE's mostly stock offer was worth about C$49 a share.
It would have needed a green light from a government that
last year vetoed a big international takeover as not being in
Canada's best interests.
TMX shares touched a high of C$44.80 after the deal was
scrapped before easing back to close at C$44.20. That's well
below the Maple offer price of C$50 a share.
Maple wants to wrap Alpha, Canada's biggest alternative
trading venue, and the CDS stock-trading clearing system into a
post-takeover TMX. That would give it a market share of more
than 80 percent and leave it facing antitrust concerns.
"Now we need to see what the Competition Bureau thinks of
Maple. We also need to see if shareholders support Maple. I
think they will, I don't see how they won't," said Alison
Crosthwait, director of global trading strategy at Instinet.
"We're going back to more of a closely held, interested
parties controlling the exchange."
Canada's independent Competition Bureau has bared its teeth
lately on several fronts, getting a C$10 million payment from
BCE Inc's (BCE.TO) Bell Canada unit for misleading advertising,
and seeking to block a joint venture between Air Canada
ACa.TO and United Continental (UAL.N).
(Additional reporting by Claire Sibonney, Andrea Hopkins, Euan
Rocha, Solarina Ho, Jonathan Spicer, Allison Martell and Trish
Nixon; editing by Janet Guttsman and Peter Galloway)