The London Stock Exchange Group (LSEG) and the Maple Group, a consortium of 13 Canadian financial institutions, have both improved the terms of their respective bids for Canada's TMX Group, operator of the Toronto Stock Exchange.
LSEG, which first unveiled its Â£4.3 billion (US$6.8 billion) bid for TMX on 9 February 2011, has announced a special dividend of 81.4 pence for LSEG shareholders and C$4 (Â£2.57) for TMX shareholders. The new dividend reflects the merger ratio of 2.9963 LSEG shares for each TMX Group share. Both exchange groups have also agreed to change to dividend policy for the combined entity – LTMX Group – so that it provides shareholders with an initial annual dividend that is at least equal to the current annual dividend per TMX Group share.
“This special dividend makes the LSEG / TMX Group merger even more compelling. Shareholders will benefit from cash upfront, plus the opportunity to participate in the ownership of an international exchange leader,” said LSEG chairman Chris Gibson-Smith. “Our new progressive dividend policy demonstrates our belief in the exciting growth opportunities and future for LTMX as an innovative and competitive international business.”
Meanwhile, the Maple Group has bumped up the value of its hostile offer for TMX Group to C$50 (US$51.32), from C$48 (US$49.27), and has increased the number of TMX Group shares to be purchased for cash from 70% to 80%. If 80% of the exchange is purchased, former TMX Group shareholders will own 27.8% of Maple.
According to Maple, its revised offer represents a premium of 30% premium over the implied value of the LSE takeover based on the closing price of the shares of LSEG and the Bank of Canada noon exchange rate on 12 May, the day before Maple's initial proposal.
If successful, Maple plans to integrate TMX's existing businesses with Alpha Group, a Canadian alternative trading system, and CDS Clearing and Depository Services, Canada’s national securities depository.
“The LSE proposes to return a bit of cash to shareholders but hasn't changed the fundamental value of its offer,” said Luc Betrand, vice-chairman of National Bank Financial and spokesperson for Maple. “The LSE take-over continues to be conditional upon the willingness of regulators in Ontario and Quebec to abandon a key Canadian public interest protection limiting ownership of the TMX Group to 10% for any one investor, as well as upon approval under the Investment Canada Act.”
Following the announcements from LSEG and Maple Group, the TMX Group reaffirmed its commitment to the LSEG's offer.
“The board takes its fiduciary responsibility extremely seriously and took the time to conduct a careful analysis of the current Maple offer,” said Wayne Fox, chair of the TMX Group's board of directors. “The board determined that the current Maple offer is not, and could not reasonably be expected to result in, a superior proposal to our agreed merger with LSEG.”