TORONTO A C$3.7 billion ($3.8 billion) hostile takeover offer for TMX Group (X.TO), operator of the Toronto Stock Exchange, by a consortium of Canadian financial institutions cleared a minor regulatory hurdle on Tuesday.
Maple Group Acquisition Corp said securities regulators have granted its application for relief from certain provisions of the Securities Act, allowing it to proceed with a two-step offer to buy 100 percent of the shares of TMX.
"This is not a significant step but it does bring the deal one step closer in that a regulatory hurdle -- albeit not significant -- has been overcome and one conditional term has been satisfied," said Darryl Levitt a lawyer with Macleod Dixon.
The first step is for Maple to buy 70 percent of TMX's shares for C$48 each in cash, for a total of about C$2.5 billion. In the second step, the remaining TMX shares would be exchanged for Maple shares. A holder of 100 TMX shares would receive C$3,360 in cash plus 30 Maple shares.
Current TMX shareholders would end up owning 40 percent of the post-takeover entity, TMX-Maple, while Maple investors would hold 60 percent.
The transaction structure was changed from the proposal submitted by Maple to TMX in early May to address U.S. securities laws, given that U.S. shareholders account for about 40 percent TMX's shares, Maple said.
Receipt of the regulatory relief from Canada's 13 provincial and territorial regulators was a condition of the takeover offer Maple launched on Monday. It does not constitute approval of the deal for any regulatory purpose, Maple said.
Maple is hoping to trump a rival all-stock bid for TMX by London Stock Exchange Group (LSE.L), currently valued at approximately $3.56 billion, based on the LSE's closing share price on Tuesday.
The friendly LSE-TMX deal's value has increased from around $3 billion when it was first announced in February because of a rise in LSE shares, which some analysts say signals investor belief that the transatlantic tie-up will not get done.
(Reporting by Solarina Ho and Euan Rocha; editing by Peter Galloway)