What a brilliantly disguised deception, eh? The start of more mergers? Nasdaq & AMEX to follow? What currency should be used? Maybe we should create a new global currency as soon as possible before the financial crisis worsens and the masses discover the true depth of the sovereign debt crisis in Britain and the USA?
TMX, LSE agree to historic merger
Financial Post February 9, 2011 3:00 PM
TORONTO — The owner of the 160-year-old Toronto Stock Exchange, TMX Group, has agreed to merge with the London Stock Exchange.
"Two highly successful and profitable institutions are joining forces to create a more diversified and international company," said Wayne Fox, chairman of TMX Group in a statement Wednesday announcing the deal.
"This merger of equals will benefit shareholders, issuers, customers, employees and other stakeholders of both organizations."
The deal — which still must be approved by the federal government — would be worth more than $6 billion.
The issue could be polarizing in Ottawa, and the opposition NDP has already voiced its concern with the deal.
Xavier Rolet, the CEO of the LSE, said the merger would create the world's largest listings venue for commodities, energy and natural-resources companies.
The combined transatlantic group would be jointly headquartered in Toronto and London, according to a joint TMX-LSE news release.
"Canadian customers will benefit from access to one of the world's deepest capital pools, while European issuers will have an effective gateway to North American financial markets," said Thomas Kloet, CEO of the TMX group.
TMX finance chief Michael Ptasznik would be chief financial officer of the new group.
Under the helm of Rolet, the LSE is fighting to win back market share lost to upstart rivals, after Europe opened markets in 2007, challenging incumbent stock exchanges that had long been protected behind national boundaries.
"The deal looks like a defensive-looking merger of equals driven by competitive pressures . . . and geographical constraints i.e. the need to attract more international business," Oriel Securities commented in a research note.
The LSE's share of U.K. equity trading so far this month has been 54.9 per cent, compared with 96.3 per cent in February 2008, according to Thomson Reuters data, while new entrants like BATS and Chi-X are rapidly gaining clout.
Shareholders in TMX Group will receive 2.9963 LSE shares for each TMX share they hold, the companies said Wednesday, and LSE shareholders will end up owning 55 per cent of the combined group.
Thomas Caldwell, chairman of Caldwell Securities Ltd., who has holdings in both the London and Canadian exchanges, said a combination makes sense because the large, established exchanges have been "bleeding off volume" to new trading platforms such as Alpha Trading Systems and Chi-X, backed by New York-based electronic trading firm Instinet Inc.
"We're entering a wild period on exchanges," said Caldwell, who has "significant" holdings in bourses in New York, Chicago, Bombay and Minnesota through Caldwell Securities and Urbana Corp.
"Once one merger takes place, stick around, there's going to be more happening," he said. "New York may want to take out the both of them (London and the TMX) together."
Shares of TMX Group have soared from around $33 last fall — when the latest merger trend began with a deal to marry exchanges in Australian and Singapore — to above $40 on Tuesday, a new 52-week high.
The London Stock exchange has two big shareholders — the Qatar Investment Authority and Dubai Bourse — which each own 20 per cent. If the merger is consummated, each would become a 10 per cent owner of the combined company.
Postmedia News, with files from Reuters
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