CI Financial Corp. (CIX) Executive Chairman William Holland, whose firm is the largest shareholder of TMX Group Inc. (X), endorsed London Stock Exchange Group Plc (LSE)’s C$3.3 billion ($3.35 billion) takeover offer for the Toronto Stock Exchange owner.
“After careful review, it is clear to us that the proposed TMX/LSEG merger protects Canadian regulatory sovereignty, champions Canadian executive management, and maintains competition and a level playing field,” Holland and 10 other Canadian financial executives said today in an e-mailed statement.
TMX shareholders will vote on whether to support LSE’s friendly cash-and-stock bid on June 30. The offer faces a rival bid from Maple Group Acquisition Corp., a cluster of 13 financial-services companies including Toronto-Dominion Bank (TD) and Manulife Financial Corp. (MFC) Maple plans to combine TMX with Alpha, a bank-owned trading platform that competes with the Toronto bourse.
“As a listed company, we do not support our competitors acting as a regulator with a monopoly over listings,” Holland said today in a telephone interview.
TMX fell C$1.31, or 2.9 percent to C$43.89 at 4 p.m. in trading on the Toronto Stock Exchange, the biggest drop in about 10 months. LSE fell 1.1 percent to 937 pence.
CI Financial, the Toronto-based money manager, is the largest institutional shareholder in TMX Group, with an almost 10 percent stake, according to Bloomberg data. Holland said he signed the letter for himself, and can’t say how his mutual funds will vote on the takeover.
“The Maple consortium has proposed the creation of a national monopoly in which our Canadian exchanges would be owned and managed by many of their most powerful participants, and thus would be burdened by significant conflicts,” the group wrote.
The other members of the group endorsing the LSE bid include Eric Bushell, the chief investment officer at CI’s Signature Global Advisors; Thomas Caldwell, chief executive officer of Caldwell Securities Ltd. and Rowland Fleming, former CEO of the Toronto Stock Exchange.
TMX said June 24 that Maple Group’s C$50-a-share offer isn’t superior to the London offer of C$44.31 a share plus a special dividend of C$4 a share that will be paid out by both firms once the deal is approved.
LSE’s offer has also been endorsed by Institutional Shareholder Services and Glass Lewis & Co., which advise mutual and pension funds on proposals in shareholder meetings. LSE needs two-thirds of TMX shareholder votes cast for its bid to succeed.
Maple Group, which has bid C$3.73 billion for the owner of the Toronto Stock Exchange, said last week that a “large majority” of TMX investors that it has contacted support the unsolicited offer over the LSE bid.
“We’ve conducted a thorough process to reach out to them, and we remain very confident that they will want to continue with our proposal rather than the LSE one,” spokesman Luc Bertrand said June 24 in an interview at Bloomberg’s Toronto office.
Mawer Investment Management Ltd. said today it rejected LSE’s takeover offer for TMX, and the Calgary-based firm considers the Maple proposal superior.
“We have voted against the deal that’s on the table right now, which is LSE,” said Jim Hall, director of research at Mawer, which holds about 1.24 million TMX shares for clients.
“To us it looks like Maple’s proposed bid is a superior offer,” Hall said in an interview. “The value is in the larger cash portion of it, actually, and you still end up with ownership of an exchange and potentially some other pieces.”
Maple Group’s investors include many of the largest banks and pension funds in Canada, including Toronto-Dominion, Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce, National Bank, Caisse de Depot et Placement du Quebec, Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, Alberta Investment Management Corp., Fonds de Solidarite FTQ, Manulife, Desjardins Financial Group, Dundee Capital Markets Inc. and GMP Capital Inc. (GMP)
TMX said June 24 that Maple Group’s C$50-a-share cash and stock offer isn’t superior to the London offer of C$44.27 a share plus a special cash dividend of C$4 a share that will be paid out by both firms once the deal is approved.