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LSE, TMX merge in mega deal

By Issac John DUBAI -- London Stock Exchange Group PLC, in which Borse Dubai has the largest stake, said on Wednesday that it has agreed an all-stock merger with Canadian exchange operator TMX Group Inc. in a deal that will create the world's No. 1 listing venue in terms of the total number of companies listed.

Following the "merger of equals" deal, LSE stakeholders will control 55 per cent of the combined company and TMX shareholders will control 45 per cent.

TMX shareholders will receive 2.9963 shares in the LSE for every TMX share they hold, creating a business with a combined market capitalisation of around $6.9 billion.

Commenting on the merger, a spokesman of Borse Dubai , which owns 20 per cent of LSE shares, said: "We have been following these developments with interest. Borse Dubai has always been supportive of management initiatives to create shareholder value in the London Stock Exchange. We continue to support the management in their efforts to create both a stronger platform and a more valuable enterprise for stakeholders."

Apart from Borse Dubai , LSE's other key shareholder is Qatar Investment Authority , which holds 15.1 per cent stake.

In December 2010, squashing persistent suggestions that Borse Dubai was eager to unload some or all of its positions, Ahmed Al Tayer, Governor of Dubai International Financial Centre, said the government owned exchange group was not looking to dispose of its investment in LSE.

Shares in the LSE jumped over 10 per cent in early trading. The merged group's exchanges will be the listing venue for around 6,700 companies with an aggregate market capitalisation of £3.7 trillion.

The merged entity will be headquartered in London and Toronto and run by the LSE's chief executive Xavier Rolet from London. The new chairman is TMX's Wayne Fox while the LSE's chairman Chris Gibson-Smith and his deputy Paolo Scaroni will serve as deputy chairmen of the combined group. Thomas Kloet, chief executive of TMX, becomes president, based in Toronto.

"This is an incredibly exciting merger with considerable growth opportunities. We are creating the world's largest listings venue for the commodities, energy and natural resources sectors, as well as the premium market for small, mid-size and growth companies," Rolet said in a statement.

The new transatlantic group will be the largest bourse for trading in mining, energy and clean technology shares. Most of the world's mining firms are listed on the 150-year-old Toronto Stock Exchange, although the largest miners are listed on the LSE.

The merged group will also be the world's largest exchange by the number of companies traded. However, by market value it will rank seventh, behind rivals such as NYSE Euronext, Deutsche Börse and Chicago Mercantile Exchange Group.

The deal comes after years of speculation over the future of the LSE, which has fought off advances from various predators, including Deutsche Börse, Sweden's OM Exchange, Euronext, Nasdaq of the US and Australia's Macquarie Bank.

The announcement of LSE-IMX merger follows the Singapore Exchange's $8.3 billion bid in October for the Australian Securities Exchange, as stock markets world-wide try to gain scale and reach in an increasingly global securities market.

© Khaleej Times 2011