TMX Group, owner of the Toronto and Montreal exchanges, has set a date for a vote on its merger with the London Stock Exchange, as it tries to push ahead with the deal before regulators and a counterbid can derail it.
TMX said on Wednesday that a special shareholder vote on the merger, set for June 30, was approved by a Canadian court.
The announcement comes just days after TMX’s board of directors rejected an approach by a consortium of Canadian banks and pension funds, known as the Maple Acquisition Corporation that contains more cash and a higher premium.
The Maple bid, however, may be preferred by shareholders, seeking its 14 per cent premium to the value of the LSE merger, as well as by Canadian regulators, who in the past have blocked deals that would see ownership of key national companies transfer to foreign groups.
Shares of TMX closed on Wednesday at C$43.57, above the value of the LSE deat at C$42.28 but below the value of the Maple bid, which is pegged at C$48.
TMX is awaiting approval of Canada’s industry ministry, which has the power to nix the deal, as it did Anglo-Australian mining group BHP Billiton’s bid to acquire Potash, the Canadian fertiliser company.
The timing, however, is complicated by the recent Canadian elections, which saw the conservatives seize majority power with leftist party New Democratic party (NDP) as the primary opposition. The previous minister of industry, Tony Clement, was replaced by Christian Paradis, a former corporate lawyer.
Analysts say conservatives are inclined to let the merger to go forward, while the NDP is unlikely to spend its limited political capital fighting the decision.
“The government has had a cabinet shuffle, and the leadership is very different. The new leadership putting together its budget, and debating this deal is not on the priority list at the moment,” said Alison Crosthwait, Toronto-based global market structure researcher at Instinet.
In a statement, LSE noted that it would be holding its own meeting on June 30 for a vote on the merger.
The Maple group, which includes banks such as Toronto-Dominion and Bank of Nova Scotia, and funds such as Ontario Teachers, said it was weighing its options. Speculation has swirled that it could return with a higher bid, though TMX’s board has already expressed concern about the leverage the group would take on to raise the cash portion of its offer.