TMX Group reiterates commitment to LSE deal

Source: TMX Group

TMX Group responded today to the announcement by Maple Group Acquisition Corporation ("Maple") on June 22, 2011 that it has revised the terms of its offer for the outstanding shares of TMX Group.

The TMX Group Board (the "Board") concluded that the revised Maple offer, like the June 13 Maple offer, is not a superior proposal for the purposes of its merger agreement with London Stock Exchange Group plc ("LSEG"). The revised Maple offer continues to not provide important financial and non-financial information that the Board would have required to make a recommendation regarding the revised Maple offer or to reach the conclusion at this time that the revised Maple offer could reasonably be expected to result in a superior proposal.

The Board unanimously continues to recommend the LSEG merger. Accordingly, TMX Group is proceeding with the vote on the LSEG merger at the June 30, 2011 shareholder meeting in accordance with the terms of its merger agreement with LSEG. TMX Group shareholders should vote FOR the merger using their BLUE proxies.

Wayne Fox, Chair of TMX Group Board of Directors said: "The merger of TMX Group and LSEG provides our shareholders with the opportunity to participate in the creation of a new, international exchange group that is poised for growth. Shareholders, market participants and other stakeholders will benefit as we work to enhance the international competitiveness of our business and the Canadian capital markets we serve."

In making its determinations, the Board considered a number of factors, including the following changes announced since the June 13 Maple offer:

  • Maple has increased the financial consideration and proportion of cash (which will be funded by additional equity contributions by Maple investors) under its offer.
  • Maple's statement in its June 22 news release that it would be prepared to negotiate a reverse break fee payable to TMX Group in the event the Maple offer does not proceed as a result of Maple not receiving Competition Bureau approvals to subsequently combine TMX Group with Alpha and CDS.

However, the Board continues to have numerous issues with the Maple offer, including:

  • The financial terms of the Maple offer, which must be evaluated in the context of a sale of control transaction of Canada's premier exchange group, a different type of transaction than the proposed merger of equals with LSEG.
  • The substantial leverage associated with the Maple offer.
  • The Maple offer raises significant conflict of interest issues and other issues that are expected to be of concern to market participants and securities regulators, and Maple does not describe how it would address those issues.
  • Maple has not detailed what steps it would be willing to take to obtain the necessary regulatory approvals, nor the quantum of the reverse break fee it would be willing to pay if Competition Bureau approvals are not received. Maple has also not offered to pay a reverse break fee where required approvals of Canadian securities regulators are not obtained.
  • There is insufficient information in the Maple offer regarding Maple's future business plans and strategy for TMX Group, particularly with respect to its projected domestic operating model and plans for international growth and expansion.
  • Notwithstanding there is additional information regarding Alpha and CDS and the process for their acquisition by Maple, there is still insufficient information to properly assess the values of Alpha and CDS or what a reasonable purchase price for these entities may be.

The reasons for the Board's determinations will be detailed in the Directors' Circular, which will be filed on a timely basis.

TMX Group Shareholder Meeting

As previously announced, TMX Group will hold its Annual and Special Meeting of shareholders to approve the merger and other resolutions on June 30, 2011 at 10:00 a.m. (ET). The meeting will be held at the Design Exchange, 234 Bay Street, Toronto. For information about the merger and how to vote, please visitwww.tmx.com/merger.

It is essential that TMX Group shareholders vote as soon as possible. TMX Group BLUE proxies must be received no later than June 28 at 5:00 p.m. (ET). Even if shareholders have already voted using the dissident proxy, they have every right to change their vote simply by executing and submitting the Blue form of proxy; it is the later-dated proxy that will be counted. Shareholders who require assistance in voting their proxies may direct their inquiries to TMX Group's proxy solicitation agent, Phoenix Advisory Partners, 1-866-793-5697 orinquiries@phoenixadvisorypartners.com.

If TMX Group shareholders approve the merger with LSEG at that meeting, the Maple offer would not, according to its terms, proceed as it is conditional on TMX Group shareholders rejecting the merger.

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