TMX Group talks with London Stock Exchange

By Rob Gillies, AP

TORONTO–TMX Group, the operator of the Toronto Stock Exchange, said Tuesday that it is in advanced talks to merge with the London Stock Exchange in a deal that would create one of the world’s largest stock exchanges. Both exchanges are heavily weighted with mining stocks and a combination would create the world’s biggest exchange for mining and energy stocks. TMX Group said the merged companies would be co-headquartered in London and Toronto and continue to be overseen by its existing regulatory authorities. TMX Group spokeswoman Carolyn Quick said the companies are considering a deal that would be a merger of equals. The TMX Group is valued at US$3 billion, while the London group’s value is slightly higher at around US$3.25 billion. The TMX Group said executives in the new company would be taken from senior leadership at both companies. TMX Group, which operates Canada’s largest exchange, issued a short statement after shares were halted Tuesday amid reports of merger talks with the London Stock Exchange. TMX declined further comment. Several exchanges have merged in recent years. Last October, the Singapore Exchange Ltd. said it would buy Australian counterpart ASX Ltd. for US$8.3 billion in a merger of Asia’s second-and third-largest trading operators. In 2007, NYSE acquired Euronext, operator of the Paris, Amsterdam, Lisbon and Brussels exchanges. NYSE Euronext formed not only the first trans-Atlantic financial market, but the world’s largest, and was part of a global rush for exchanges to find partners or be left out of a massive consolidation push. The same year Nasdaq Stock Market Inc., which lost its first battle to cross the Atlantic with a failed bid for the London Stock Exchange, also agreed to buy Nordic exchange operator OMX AB. Thomas Caldwell, chairman and CEO of Caldwell Securities Ltd. and an investor in both exchanges, said a merger could make it easier for Canadian companies to gain exposure to foreign investment. “You’re creating the largest resource exchange in the world,” Caldwell said. Caldwell said it might allow for a public company in Canada to list in London, giving a company a greater number of investors in Europe and the Middle East. In addition to the Toronto Stock Exchange, TMX Group also operates the TSX Venture Exchange, Montreal Exchange, Natural Gas Exchange, Boston Options Exchange, Shorcan and Equicom. The London Stock Exchange Group operates the London Stock Exchange and the Italian stock exchange Borsa Italiana. Major mining companies like Rio Tinto PLC and Xstrata PLC are listed on the London exchange. The merger would require Canadian government approval and approval from provincial regulators. Prime Minister Stephen Harper’s Conservative government blocked BHP Billiton’s foreign takeover of Potash Corp. of Saskatchewan last November.