Maple Group Acquisition Corp. spokesman Luc Bertrand said a “large majority” of TMX Group Inc. investors he’s talked with prefer his firm’s unsolicited takeover bid to an offer from London Stock Exchange Group Plc.
“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,” Bertrand said June 24 in an interview at Bloomberg’s Toronto headquarters.
Maple Group, a cluster of 13 Canadian financial-services companies formed for this bid, have three days to convince TMX investors of the merits of its C$3.73 billion ($3.77 billion) offer for the owner of the Toronto Stock Exchange. On June 30, TMX investors are scheduled to vote on LSE’s friendly bid, valued at C$3.33 billion.
“If people want to keep our deal alive, they have to vote against the LSE arrangement on the 30th,” said Bertrand, vice chairman at National Bank of Canada, the country’s sixth-largest bank.
Bertrand said Maple Group has support from “a large percentage” of the investors he’s spoken with. He wasn’t more specific.
Maple’s investors include many of the largest banks and pension funds in Canada, including Toronto-Dominion Bank, Bank of Nova Scotia, 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 Financial Corp., Desjardins Financial Group, Dundee Capital Markets Inc. and GMP Capital Inc.
Carolyn Quick, a spokeswoman for TMX, said the Toronto-based bourse is “in continued dialogue with our shareholders and are receiving very encouraging feedback.”
TMX said June 24 that Maple Group’s C$50-a-share offer isn’t superior to the London offer of C$44.83 a share plus a special dividend of C$4 a share that will be paid out by both firms. Bertrand declined to speculate on whether the bids would go higher.
“Our bid is solid,” said Bertrand, 56. “I think I’d feel differently if (LSE) were quite serious about it by cutting a check from their own treasury.”
One of the advantages of the LSE bid is its ability to promote cross-border listings for companies, said Steve Grob, director of strategy at Fidessa Group Ltd. in London, which provides trading technology to brokerages including TMX.
Maple Group “would probably find it difficult to find a lot of strategic options,” Grob said in a telephone interview. “Whereas the LSE deal is something that is much more global.”
In addition, LSE’s offer has been endorsed by Institutional Shareholder Services and Glass Lewis & Co., which advise mutual and pension funds on proposals in shareholder meetings.
Bertrand, a former deputy CEO of TMX, isn’t fazed by the recommendations. Maple’s offer is backed by billionaire investor Stephen Jarislowsky, one of Canada’s richest men and a longtime advocate shareholder.
That endorsement “has more weight than Glass Lewis and ISS,” said Bertrand. “Having someone like Mr. Jarislowsky recognize the merits of what the Maple Group is trying to do, to me that’s greater testimony than anything we can ask for.”
Bertrand is unsure whether Maple Group will make further overtures should shareholders vote in favor of LSE’s bid this week. The transaction still faces regulatory challenges, including one from Canada’s competition regulator.
Should it not win clearance, Maple Group could make another offer for the exchange owner, although under less-favorable terms.
“If we do decide to come back, well, then it would be on totally different circumstances,” said Bertrand. “And I think everyone has to understand that. Presumably then, we’d be the only arrangement in town.”
Bill Tynkaluk, deputy chairman of Leon Frazer & Associates Inc., which oversees about C$1.85 billion including TMX shares, said he prefers neither bid.
“I’d like to see the TSX remain independent,” Tynkaluk said. “I think as an independent company, it’s done a reasonably good job.”