New firms join Canadian bid for Toronto exchange

[June 13, 2011]  TORONTO (AP) -- Four new financial companies have joined a rival Canadian-only $C3.6 billion bid for the TMX Group that could block a proposed merger of the Toronto and London stock exchanges.

Maple Group Acquisition Corp. announced Sunday that Desjardins Financial Group, Dundee Capital Markets, GMP Capital Inc. and Manulife Financial have signed on as investors.

Manulife is Canada's largest insurance company and Desjardins the biggest credit union, with major financial operations in Quebec. Dundee and GMP are smaller wealth managers.

Maple, made up of a who's who of Canada's major financial players -- including several major banks -- has put forward a US$3.67 billion bid to acquire TMX Group, which owns the Toronto exchange.

TMX rejected the bid, saying there are too many uncertainties, including regulatory and debt risks.

The bid from the London Stock Exchange is worth about US$3 billion.

The Maple bid is meant to keep TMX in Canadian hands after many bank and government officials raised concerns about the so-called "merger of equals" with the London Stock Exchange, which is technically a takeover by the British operator.

But TMX Group is intent on pushing ahead with the London Stock Exchange transaction and has publicly dismissed the threat that shareholders would accept the Maple proposal.

On Sunday, TMX declined to comment on the new Maple Group partners.

TMX's rejection prompted Maple to go directly to shareholders with its offer. It hopes the addition of more big investors will send them a stronger signal.

A statement from Maple Group didn't indicate if it would raise its bid, but spokesman Luc Bertrand says the additional investors are another indication that its offer is superior to the merger with the London exchange.

"Our vision for an integrated exchange provides a better way forward for Canada's capital markets," he said in the release.

Monique Leroux, Desjardins' president and CEO, said the Maple bid for TMX "provides Canadians with an excellent opportunity to collaborate and cooperate in order to maintain a strong and growing financial industry that will enhance our economy both in Quebec and across Canada."

Ned Goodman, chairman of Dundee Capital, said, "Canada's small-and mid-cap companies and markets will do better with Maple than they will with the LSE. As an independent broker-dealer, we support Maple's vision."

Maple went directly to shareholders last month, announcing an informal C$48 (US$48.95) per share proposal -- which represents a 24 percent premium to the implied value of the merger with the LSE Group.

Members of the Maple Group Acquisition Corp. include Alberta Investment Management Corp., Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Fonds de solidarite des travailleurs du Quebec, National Bank Financial Inc., Ontario Teachers' Pension Plan Board, Scotia Capital Inc. and TD Securities Inc.

[Associated Press]

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