TORONTO - The operator of the Toronto Stock Exchange is being targeted by a new Canadian takeover bid even as it tries to push through a controversial merger with the London Stock Exchange.
TMX Group Inc. (TSX:X) said Saturday it has received a written proposal from a number of unidentified Canadian financial institutions but did not disclose any financial details of the bid.
TMX Group is in the midst of an attempted multibillion-dollar merger with the London Stock Exchange, a proposal that has met with some opposition, including from some of Canada's big banks.
Ontario Finance Minister Dwight Duncan welcomed the bid and said he received a briefing from its backers, but declined to name who was behind it.
"I applaud them, I think they're also Canadian patriots," he said in a phone interview. "I think they recognize how important our financial services is to a brighter future for Canada."
Duncan is among those who have expressed concern that merger with the London exchange could leave Canada's biggest stock exchange dominated by foreign interests.
"It (the bid) appears to address a number of the concerns that I have raised with respect to governance and control," Duncan said.
A news release from TMX Group said the acquisition offer includes pension funds and banks and was operating under the name Maple Group Acquisition Corp. The TMX board of directors will evaluate the proposal.
"The Maple proposal, which is not binding and was prepared for discussion purposes, provides for a combination of cash and equity consideration stated to be at a premium to the current market price of TMX Group shares," said a news release issued by TMX Group on Saturday.
The TMX statement did not provide a dollar figure on the acquisition bid but if it represents a premium to the company's last traded stock price of $41.75 the bid would have to top $3.1 billion.
The merger deal with the London exchange would value the combined companies at about $6-billion.
The proposal also involves a number of significant conditions, including regulatory approval for the combination of TMX Group with both Alpha Group and CDS Inc., but does not specify the means for satisfying these conditions, the statement said.
The six biggest Canadian banks, as well as Canaccord Capital, the Canada Pension Plan Investment Board and Desjardins Securities, set up the Alpha alternative market in 2008. Alpha is an electronic trading system that estimates it represents 20 to 25 per cent of all trading volume of TSX-listed securities.
If the Toronto Stock Exchange gets bigger by joining with the LSE, Alpha could face increased competition.
Duncan said the Ontario government would also evaluate the new bid and despite his enthusiasm he cautioned it would be "premature" for him to indicate whether he preferred it over the merger with the London exchange. But he said he was "excited" that a Canadian led acquisition bid has emerged.
"It gives Canadians an alternative," he said.
The TMX statement said it would offer no further comment on the Maple proposal or those behind it until it was evaluated.
"TMX Group will continue to pursue efforts currently underway to secure the necessary regulatory and shareholder approvals required to complete its agreed merger with London Stock Exchange Group," the statement added.
TMX Group announced Friday it has filed applications with provincial regulators to approve the merger with London Stock Exchange.
It was hoped regulators would decide on whether to approve the merger sometime this fall.
A successful merger would see Toronto getting seven seats on the 15 member board of directors of the combined exchanges, for at least five years. After that the LSE board could vote to reduce that number, but not below a minimum of three seats.
Canada's big banks are divided on the merger, with the notable exceptions of the Royal Bank (TSX:RY) and Bank of Montreal (TSX:BMO). Those two banks are advising the stock exchanges on the transaction.
A committee of the Ontario legislature said last month that both parties should rewrite their proposed multibillion dollar merger to better protect Canada's interests.
Gilles Bisson, a New Democrat member of that committee, said that a Canadian bid was welcome, but it raised fresh concerns and he called for the committee to be recalled to review the takeover bid.
"It does mean to say that the banks would control not just the banking sector but would control various types of capital through the stock market," he said in an interview.
"I think we need to sit down and look at what this really means."
The importance of having members of the legislature review the acquisition bid is doubly important because unlike the merger proposal, the takeover attempt appeared to involve no foreign interests so the federal government would not have to sign off on it, said Bisson, who added Duncan would get the final say.
"He'll stick his finger in the wind and figure out which way the wind is blowing and that's where he'll go," Bisson said.
"We should not leave this in the hands of Minister Duncan."