LSE’s rival in Canadian bid puts offer to shareholders

The Maple Group of Canadian banks and pension funds has turned hostile with a £2.3bn bid after TMX’s board rejected the offer although it trumps the LSE’s £1.8bn agreed all-paper bid.

Maple, whose group includes some of TMX’s top customers, said it was forced to circumvent the board after TMX and the LSE said shareholders would vote on the deal on June 30.

“By accelerating the timing of their meeting to consider the LSE takeover, they have given us no choice but to make our offer available directly to TMX Group shareholders,” said Luc Bertrand, lead spokesman for the Maple Group and vice chairman of National Bank of Canada, one of the Maple banks.

The hostile approach by Maple, which hopes to galvanise simmering nationalist opposition to a takeover of Canada’s main exchange by foreigners, leaves shareholders in TMX facing a decision that could determine not only the fate of TMX but also that of the LSE.

Scooping up TMX is likely to make the LSE, which is headed by chief executive Xavier Rolet, too large to be a realistic takeover target for rivals such as United States exchange Nasdaq OMX and the Singapore Exchange, both of which have seen their merger plans dashed in recent weeks.

If it were to fails, it risks being left a sitting duck as predators circle. But Maple still faces an uphill struggle.

The decision by Nasdaq to walk away from its hostile £6.9bn bid for transatlantic peer NYSE Euronext last week amid regulatory opposition prompted some industry experts to warn that unsolicited exchange bids faced a bumpy road.

Maple can certainly bank on its Canadian credentials helping to soothe political worries about foreign takeovers.

But some experts say watchdogs may baulk at allowing four of the largest Canadian trading firms to take control of the flagship bourse because of vested interests.

The takeover battle also throws a spotlight on the commercial tensions that underpin the exchange operator market.

Some of TMX’s largest customers, such as RBC Capital Markets and BMO Capital Markets, are advising on the agreed LSE-TMX deal or backing the rival Maple plan.

With banks and pension funds stepping into uncharted territory with their bid for an exchange, all eyes are on shareholders – and regulators.

In the meantime, the LSE and the Maple Group have clashed over their respective TMX proposals since the consortium first revealed its plan on May 14.

LSE and TMX claim their plan offers longer term value.