TORONTO (AP) ? Canada's competition watchdog and Ontario's securities regulator on Wednesday approved a CA$3.8 billion (US$3.75 billion) bid by a group of Canadian financial institutions to take over the operator of the Toronto Stock Exchange and merge it with two other exchanges.
Maple Group Acquisition Corp. will be permitted to operate a combined exchange and clearing group involving the TMX Group, along with the alternative Alpha Trading Systems Inc. and the Canadian Depository for Securities Ltd.
TMX and Alpha control some 85 percent of all stock trades in Canada, raising some concerns that the merger would give too much power to a single market and clearing operator controlled by Canada's big financial institutions.
Canada's Competition Bureau said that despites its concerns, it will not challenge Maple Group Acquisition Corp.'s proposed takeover of the TMX Group. The Ontario Securities Commission also gave its approval. However, the proposed takeover and mergers remain under review by the British Columbia and Alberta securities commissions.
Competition Commissioner Melanie Aitken said the bureau's serious concerns with the proposed transaction have been addressed.
"The measures contained in the (Ontario Security Commission's) final recognition orders materially change the regulatory environment sufficient to substantially mitigate the bureau's competition concerns," she said.
Both the exchange and clearing group orders are subject to terms and conditions to provide what the Ontario regulator described as an "enhanced oversight program."
The orders have been reviewed and agreed to by all members of Maple Group, the consortium said in a statement.
TMX CEO Tom Kloet said the recognition orders would provide enhanced regulatory oversight "and the foundations upon which we will build an efficient and globally competitive exchange group."
"We are very pleased with the strong progress being made to secure the necessary regulatory approvals," said Maple Group chief spokesman Luc Bertrand.
Quebec's securities regulators, the Autorite des marches financiers, previously published final recognition orders with respect to Maple's proposed acquisition of TMX Group and Alpha.
The recognition orders follow comprehensive reviews that included public hearings and public comment periods.
The Competition Bureau said measures contained in approvals by the provincial securities regulators substantially mitigate its concerns.
Under the deal, Maple's offer to acquire a minimum of 70 percent and a maximum of 80 percent of the shares of TMX Group for CA$50 (US$49) in cash per share is open until 5 p.m. EST (2100 GMT) on July 31 unless further extended or withdrawn.
The offer is part of an integrated acquisition transaction, valued at approximately CA$3.8 billion (US$3.75 billion), to acquire 100 percent of TMX Group shares.
The investors in Maple Group Acquisition Corp. include 13 of Canada's largest financial heavyweights including the Canada Pension Plan Investment Board, the Ontario Teachers' Pension Plan, several banks, and Manulife Financial.
Maple said investment dealer GMP Capital Inc has agreed to withdraw from the investor group due to a requirement by Ontario and Quebec regulators that Maple's board include no more than 50 percent representation from the consortium's shareholder group.
Maple Group is the only suitor remaining to buy TMX Group after a proposed merger with the London Stock Exchange was killed because there was not enough TMX shareholder support.
The TMX has said it will continue its expansion plan, whether it comes to an agreement with Maple, or moves forward on its own.
On the Toronto Stock Exchange, the TMX group's shares were up CA$1.17 (US$1.16), or 2.5 percent, at CA$48.02 (US$47.44) in midday trading Wednesday.
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