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Maple’s TMX Bid Latest Bourse Merger Raising Competition Concern

Maple is offering C$3.73 billion ($3.61 billion) for TMX. Photographer: Norm Betts/Bloomberg
Maple is offering C$3.73 billion ($3.61 billion) for TMX. Photographer: Norm Betts/Bloomberg

Nov. 30 (Bloomberg) -- Maple Group Acquisition Corp. said that Canada’s Commissioner of Competition said she has “serious concerns” about a proposed purchase of TMX Group Inc., operator of the Toronto stock exchange.

Canada’s competition watchdog told the companies the concerns are “primarily in connection with equities trading and clearing settlement services in Canada,” Maple Group said in a statement dated Nov. 29. Maple is offering C$3.73 billion ($3.61 billion) for TMX.

Regulators from Europe and the U.S. to Japan and Australia have scrutinized more than $30 billion in global exchange mergers announced since October last year amid concern over who gets to control national capital markets. NYSE Euronext and Deutsche Boerse AG must wait until Jan. 23 to find out if they’ve made enough concessions for Europe to allow them to form the world’s biggest exchange, NYSE Group Executive Vice President Garry Jones reiterated today.

TMX and Maple will work with the regulator to address the concerns, including identifying possible “remedial measures,” Maple said in the statement. The proposed deal needs approval from the commissioner.

Deutsche Boerse’s bid for NYSE is the only one of the announced deals to have been approved by shareholders, while the board of TMX has recommended owners accept Maple’s offer.

“We’re still optimistic that things will go through,” NYSE’s Jones said in Singapore on the sidelines of a conference on derivatives trading. “There’s an ongoing market consultation process. After that, they’ll come back to us and tell us whether they think it’s going to work or not going to work.”

‘Purely Administrative’

The European Union’s decision on whether to approve the deal has been postponed for about a month to Jan. 23 because of the holiday period, said Jones, head of global derivatives at NYSE. “It’s purely an administrative delay,” he said. Cynthia Wan, an information officer at the European Union office in Hong Kong, referred inquiries to colleagues in Brussels.

Maple Group, comprising of Canadian pension funds and banks, made an unsolicited offer for TMX in May, challenging a friendly bid by London Stock Exchange Group Plc. LSE and TMX scrapped their cash-and-stock transaction on June 30 after failing to get enough shareholder backing and amid political opposition to the deal.

Tokyo-Osaka Bid

TMX Chief Executive Officer Thomas Kloet said at the time that addressing competition concerns was a “significant hurdle” in relation to the LSE bid.

Tokyo Stock Exchange Group Inc., operator of Japan’s largest bourse, last week announced a takeover bid that values Osaka Securities Exchange Co. at 129.6 billion yen ($1.66 billion). That transaction requires regulatory approval.

TSE holds a 4.99 percent stake in Singapore Exchange Ltd., whose bid for ASX Ltd., Australia’s main bourse operator, was rejected in April by the southern country’s Deputy Prime Minister and Treasurer Wayne Swan because it was deemed to be against “national interest.”

Opponents of the Deutsche Boerse and NYSE merger were asked to give their views on a Nov. 17 offer to divest some European single-equity derivatives units, according to a document obtained by Bloomberg News that was sent by the European Commission Nov. 22. Clients and competitors were also asked for their views on Deutsche Boerse’s proposal to give rivals temporary access to its clearinghouse, Eurex Clearing, for new products.

EU Objections

Most of the EU’s objections focus on “the trading of derivatives on exchange,” EU Competition Commissioner Joaquin Almunia told lawmakers Nov. 22. Regulators told the two companies last month that their deal would monopolize derivatives trading in the region. The EU can block a deal or require concessions from companies to eliminate potential antitrust problems.

An EU antitrust complaint sent to the companies in October rejected arguments from Deutsche Boerse and NYSE that they aren’t direct rivals on short-term and long-term interest rate debt products.

The concessions submitted to regulators attempted to assuage those criticisms and EU concerns over European single-stock equity derivatives and European equity-index derivatives, according to the document.

The NYSE takeover would put more than 90 percent of the region’s exchange-traded derivatives market and about 30 percent of European stock trading in the hands of one organization.

Companies potentially affected by the deal had until Nov. 28 to answer more than 70 questions on the two proposals made by Deutsche Boerse and NYSE Euronext, based in New York.

“When you put together remedies, things are going to change to allow regulators to approve the deal,” Jones said. “Because of the holiday period, we just got delayed for a month. There’s nothing to read into it.”

To contact the reporter on this story: Jonathan Burgos in Singapore at

To contact the editor responsible for this story: Nick Gentle at

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