TORONTO (Reuters) - the Canada TMX Group, operator of Toronto Stock Exchange, has received a proposal for taking control of a group of banks and pension funds which might outweigh a friendly offer of 3 billion of the London Stock Exchange.
A takeover by Canadian financial institutions can represent an alternative more acceptable to opponents of the LSE proposal, which many are concerned about the control of the largest market of stock of the country fall into foreign hands.
Legislators and other elected officials in Ontario, the province in which Toronto is located, want that the city does not lose its status as world financial centre of insurance. The last proposal, announced by TMX in a statement Saturday, could respond to these concerns.
"Now, Canadians have a Canadian alternative to look at which points to the strength of our financial services sector," said Finance Minister Dwight Duncan, an adversary at the beginning of the public offer for the purchase of the LSE.
As for Canadian identity banks and pension administrators, making the proposal, they took the name Maple group Acquisition Corp. - referring to the more patriotic symbol of the country, the maple leaf.
Maple group consists of four major Canadian banks - Toronto Dominion Bank, National Bank of Imperial Commerce and Bank of Nova Scotia - pension funds of the provinces of Ontario, Quebec and Alberta Canada, Canadian Bank, a source of knowledge of the agreement said Reuters.
More than two Canada other major banks, Bank of Montreal and the Bank Canada, Royal are advisers in the LSE TMX deal and support.
WAVE OF CONSOLIDATION
Offers are part of a wave of consolidation in the industry of global exchange. Two bidders are courting NYSE Euronext, while Australia, last month rejected an offer for its senior exchange of Singapore Exchange for nationalist reasons.
The same fate could await the London Stock Exchange. It must pass muster with a series of regulators provinces, including the Ontario Securities Commission. The final and perhaps most formidable obstacle is a Federal review under the Act on investment Canada.
For approval, the Government must certify that an agreement has a net benefit for the Canada. Submission of 39 billion dollars BHP Billiton Potash Corp., largest maker of fertilizers most, has been victim of such a review last year.
Alison Crosthwait, Director of global business strategy at Instinet, said the proposal of the Group of Maple would face the same regulatory barriers as a LSE deal, but wrapped in the flag Canadian would probably a better chance to cross.
"I believe that Canadians love to possess their own institutions and I think that the Government will be more comfortable with a Canadian agreement," she said.
OFFER PRICES OF MARKET
TMX did not say how many financial institutions were willing to pay for the operator of the largest market shares of the Canada, only that the proposal of cash and equity was the current price of the market for the shares of TMX.
TMX Group stock closed at C$ 41.75 Friday, valuing the company at approximately c 3.11 billion ($3.2 billion), higher than the offer of all stocks of the London Stock Exchange. The Globe and Mail said on its Web site the Maple group bid was worth C $48 by action, or approximately $ 3.6 billion, compared to about 39.21 LSE C bid $ per share.
"If you have a strong cash offer, if you own the stock and you run a Fund, the natural propensity is to take the money and the race," said Thomas Caldwell, whose firm, Caldwell securities, is majority shareholder in the TMX Group."
"I don't know what is the meter of their (London), to less than London, said, ' Hey, forget a stock deal, we can do in cash,' but I'm not sure that London has this power of fire.".
The London Stock Exchange confirmed Saturday, he had been notified by the TMX of the rival group of Maple approach, but it remains attached to its merger with TMX, said.
In addition to the TMX Toronto-based on the stock market, Ontario is the owner of the TSX exchange for stocks of small-cap and the bourse de Montréal for commercial derivatives.
(Other reports by Chris Wickham in London.) (Editing by Frank McGurty and Todd Eastham)
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