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The Resource for the Global Finance Profession

Maple Group Hits Potential Snag in TMX Acquisition Effort

  • By Andrew Deichler
  • Published: 2011-12-01

Maple Group Acquisition Corp. revealed in a statement Tuesday that the Commissioner of Competition is apprehensive about the bank and pension fund consortium’s proposed acquisition of TMX Group. Approval by the Commissioner is a condition to completion of the $3.73 billion deal.

Commissioner Melanie L. Aitken told Maple that she has “serious concerns” over the competitive effects that the deal could have on the current environment, particularly in equities trading, as well as clearing and settlement services. There has been speculation for some time that the deal might not be approved by regulators, since it involves merging TMX with alternative trading system Alpha Group and clearing system CDS Inc. Some analysts are concerned that the deal could give banks a near monopoly on the market.

However, Maple noted that Aitken has yet to reach a final decision and has indicated that her stance on the issue could change pending further developments, such as changes in the applicable securities regulatory regime and corrective actions Maple could potentially take.

Maple said it intends to work closely with the Competition Bureau to address the Commissioner‘s concerns, including “identifying appropriate remedial measures.” Maple maintains that it is committed to working constructively with regulators. If regulatory approvals are not obtained by the expiration date of Maple’s offer (January 31, 2012), Maple will likely extend the date through April 30, 2012.

Meanwhile, The Globe and Mail speculated that this potential block from the Competition Bureau could open the door to another attempt at a merger between the London Stock Exchange and TMX. LSE is in talks to buy European clearing house LCH. Clearnet, and will likely be looking for another merger or acquisition following the outcome of that deal. If TMX is ripe for the taking again, LSE might make another play for it as it attempts to position itself as a global exchange.

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