The bidder, a 12-strong consortium of financial institutions, said shareholders owning 91% of TMX stock had signed up to its C$50 per share offer by Tuesday's deadline, giving it more than the 70% to 80% of TMX shares it was targeting in the first round of its offer.
With antitrust clearance and provincial securities regulators' approvals in the bag, Maple can now complete a takeover that will give it about 85% of Canadian equities trades and unite competing trading platform Alpha Trading Systems LP with TMX's Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange and Natural Gas Exchange Inc. The addition of clearinghouse Canadian Depository for Securities Ltd. under the umbrella will create an all-Canadian vertically integrated provider of securities exchange services that is seen likely to target acquisitions outside its borders -- and sooner rather than later.
The Maple consortium of pension funds and financial institutions had formed to challenge London Stock Exchange Group plc's agreed C$3.6 billion takeover of TMX, which proved unpopular with the target's shareholders and which the LSE pulled in June to pre-empt a TMX "no" vote. Maple's approach was initially treated as hostile but it won TMX in October after the agreement of a reverse breakup fee provision.
"It was surprising that Maple showed up in the first place and that banks and funds were able to put aside the competitive aspect and come together to do this," said one person familiar with the situation.
Canada's Competition Bureau in November deemed the takeover problematic, presenting a not-insignificant obstacle to the deal's completion. The issue remained in play until July 4, when the Ontario Securities Commission published so-called recognition orders that allayed the federal regulator's concerns. The OSC's insistence on independent representation on the board of the enlarged entity was particularly decisive.
"The OSC got comfortable that the recognition orders would allow them to regulate the company in such a way that it wouldn't be able to exert undue influence on the market," the person said.
The combined entity will have as its CEO Tom Kloet, the existing chief executive of TMX, with former RBC Capital Markets head Chuck Winograd serving as chairman.
The new entity appears eager to participate in the global consolidation of bourse operators. Last month it was reported to be in talks to buy Jersey City, N.J.-based stock market operator Direct Edge Holdings LLC, a 14-year-old company that claims a 10% to 12% share of U.S. equities trading. Its shareholders include International Securities Exchange LLC, Knight Capital Group Inc., Citadel Securities LLC and Goldman Sachs Group Inc.
Maple said it would extend its offer to Aug. 10 to give all TMX shareholders the opportunity to receive cash for some of their shares. Maple will follow up that offer with a second-stage, stock-for-stock transaction for the remaining shares, subject to court approval. The new entity will on Aug. 10 change its name to TMX Group Ltd.
It will retain a Toronto listing, with about 27% of the stock in free float.
The transaction, which Maple will finance with about C$2 billion equity and C$1.3 billion debt, was due to close later Wednesday.
The Maple consortium members are Alberta Investment Management Corp., Caisse de Dépôt et Placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de Solidarité des Travailleurs du Québec, National Bank Financial Inc., Ontario Teachers' Pension Plan, Scotia Capital Inc., TD Securities Inc. and Manufacturers Life Insurance Co.
Maple is taking financial advice from CIBC World Markets, National Bank Financial Markets, Scotia Capital and TD Securities.
The Maple consortium and certain of its shareholders received legal counsel from a Davies Ward Phillips & Vineberg LLP team that included Vincent Mercier, Steven Harris, Philippe Rousseau, Matthew Hawkins, Matthew Himel, John Bodrug, Anita Banicevic, Peter Hong, Elie Roth and Chris Anderson and Derek Vesey; and from McCarthy Tétrault LLP.
Blake Cassels & Graydon LLP's Calvin Goldman and Navin Joneja were co-counsel on antitrust issues alongside Davies Ward lawyers. Paul Findlay at Borden Ladner Gervais LLP advised Canadian Pension Plan Investment Board.
A Paul, Weiss, Rifkind, Wharton & Garrison LLP team including Edwin Maynard, Matthew Abbott, Mark Bergman, Patricia Vaz de Almeida, David Sicular and Mashiho Yuasa was U.S. counsel to Maple consortium members. A Weil, Gotshal & Manges LLP team including Michael Aiello, Ellen Odoner, Peter King and Helyn Goldstein was legal counsel to the five pension funds that form part of Maple.
TMX's advisers include Bank of America Merrill Lynch's David Adler, Kaivan Shakib, Marianne Harris and Jeff Schellenberg, and a BMO Capital Markets Corp.'s Andre Hidi and Ariel Walsh.
TMX took legal advice from a Torys LLP team that included Richard Balfour, Sharon Geraghty, Aaron Emes, Omar Wakil, Tom Zverina, Dean Kotwal, Morgan Crockett and Catherine De Giusti.
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