Maple-TMX deal wins OK from B.C. and Alberta securities regulators

TORONTO – The Maple Group Acquisition Corp. cleared its last major regulatory hurdles Wednesday in its takeover of the TMX Group Inc. (TSX:X) as the B.C. and Alberta securities regulators signed off on the deal.

Maple Group — a consortium of some 12 Canadian pension funds, banks and insurers — said it has agreed to the terms of those orders, which focused on the TSX Venture Exchange, which B.C. and its Alberta counterpart co-regulate, along with Alberta’s concerns about the Natural Gas Exchange.

“The publication of recognition orders from the British Columbia and Alberta Securities Commissions establishes the terms under which they will permit us to operate our integrated exchange and clearing group,” said Maple spokesman Luc Bertrand.

“This sets the stage for Maple to take up TMX Group shares under its offer on July 31, and we now strongly urge TMX Group shareholders to deposit and tender their shares to our offer before it expires on July 31.”

The deal has already been approved by regulators in Ontario and Quebec, as well as the federal Competition Bureau, which was thought to be the biggest hurdle it needed to surpass.

But TMX shareholders will have the final say on whether the deal is approved and have until July 31 to tender their shares.

The deal was first proposed more than a year ago, in February 2011, after the operator of the London Stock Exchange first proposed a takeover of the owner of various Canadian stock exchanges.

When the LSE transaction was defeated by shareholders, the TMX threw its support behind the Maple bid last October.

TMX chief executive Tom Kloet,who joined his board in supporting the Maple takeover after the LSE proposal failed to gain shareholder approval, thanked regulators Wednesday.

“Following completion of the transaction, TMX Group will be a stronger organization, able to introduce new innovation and efficiency to the Canadian market, and to grow, compete and win more effectively on the global stage,” he said.

Regulators in B.C. — home to some 1,100 companies representing about half of those listed on the TSX Venture Exchange — said concerns were raised about how the deal would affect early-stage businesses and their ability to raise cash.

“The TSX Venture is a vital means for venture companies to raise capital and engage in early stage business development, including resource exploration,” BCSC chairwoman Brenda Leong said.

“After extensive consultations with venture market participants over the past year, we are issuing orders with conditions aimed at mitigating those risks – both to the Canadian public venture market and to independent dealers,” said Leong.

The B.C. conditions include: 25 per cent of the TMX board must have a venture business and at least two directors on the CDS board be independent; the venture exchange will maintain an office in Vancouver, as well as its pledged support for the growth of a Canadian venture market.

Among other conditions, it also requires that the B.C. regulators approve of any changes to rules or fees on the TSX Venture Exchange.

The Alberta regulators ordered the Natural Gas Exchange be recognized as an exchange and a clearing agency under the province’s securities laws and that it take steps to address conflicts of interest and confidentiality issues that could arise from the new ownership structure.

The investors in Maple are the Alberta Investment Management Corp., Caisse de depot et placement du Quebec, the Canada Pension Plan Investment Board, CIBC World Markets Inc. (TSX:CM), Desjardins Financial Group, Dundee Capital Markets Inc. (TSX:DC.A), Fonds de solidarite des travailleurs du Quebec, National Bank Financial & Co. Inc. (TSX:NA), Ontario Teachers’ Pension Plan, Scotia Capital Inc. (TSX:BNS), TD Securities Inc. (TSX:TD) and Manulife Financial (TSX:MFC).

Also on Wednesday, the Wall Street Journal reported that TMX is in talks to acquire U.S. stock exchange operator Direct Edge Holdings LLC.

Citing people familiar with the matter, including one who said the talks may fall apart, the report said a deal was unlikely until TMX cleared its own regulatory hurdles related to the Maple deal.

Officials for TMX and Direct Edge both declined to comment.

Direct Edge, based in Jersey City, N.J., is the fourth largest stock market in the U.S. and holds about 10 to 12 per cent of the U.S. stock exchange market share.