TORON­TO-Cana­da's Com­pe­ti­tion Bu­reau and On­tario's se­cu­ri­ties reg­u­la­tor yes­ter­day ap­proved a CA$3.8 bil­lion (US$3.75 bil­lion) bid by a Cana­di­an con­sor­tium to buy TMX Group, the op­er­a­tor of the Toron­to Stock Ex­change, and merge it with two oth­er ex­changes. The Com­pe­ti­tion Bu­reau post­ed on its Web site that it does not in­tend to chal­lenge Maple Group Ac­qui­si­tion Corp's bid for TMX Group.

The ap­proval came as the On­tario Se­cu­ri­ties Com­mis­sion al­so gave its ap­proval and pub­lished fi­nal recog­ni­tion or­ders for the deal. Maple Group Ac­qui­si­tion Corp said the On­tario Se­cu­ri­ties Com­mis­sion ap­proval or­ders set out the terms un­der which Maple will be per­mit­ted to op­er­ate a com­bined ex­change and clear­ing group in­volv­ing the TMX, along with the al­ter­na­tive Al­pha Trad­ing Sys­tems Inc and the Cana­di­an De­pos­i­to­ry for Se­cu­ri­ties Ltd.

TMX and Al­pha con­trol some 85 per cent 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. How­ev­er, TMX and Maple said in a joint state­ment that the On­tario reg­u­la­tor's or­ders ap­prove the pro­posed ac­qui­si­tion of TMX Group, Al­pha and CDS.

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 agreed to by all mem­bers of Maple Group, the con­sor­tium said in a state­ment. Maple Group spokesman Luc Bertrand said the ap­provals were "a very ma­jor mile­stone" for the con­sor­tium of 12 Cana­di­an banks, pen­sion funds, bro­ker­ages and in­sur­ers lead­ing the bid.

"My un­der­stand­ing is that it was a lot of work be­tween the bu­reau and the (On­tario Se­cu­ri­ties Com­mis­sion to) sat­is­fy that post-trans­ac­tion there would be a reg­u­la­to­ry struc­ture that ad­dress­es the bu­reau's con­cerns," he said in an in­ter­view. 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."

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. How­ev­er, the pro­posed takeover and merg­ers re­main un­der re­view by the British Co­lum­bia Se­cu­ri­ties Com­mis­sion and the Al­ber­ta Se­cu­ri­ties Com­mis­sion.

Un­der the deal, Maple's of­fer to ac­quire a min­i­mum of 70 per cent and a max­i­mum of 80 per cent of the shares of TMX Group for CA$50 (US$49) in cash per share is open un­til 5 pm on Ju­ly 31 un­less fur­ther ex­tend­ed or with­drawn. The Maple con­sor­tium has al­ready ex­tend­ed its dead­line sev­er­al times as it awaits full ap­proval for the plan that would see it con­trol as much as 90 per cent of trad­ing ac­tiv­i­ty in Cana­da.

The of­fer is part of an in­te­grat­ed ac­qui­si­tion trans­ac­tion, val­ued at ap­prox­i­mate­ly CA$3.8 bil­lion (US$3.75 bil­lion), to ac­quire 100 per cent 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.

AP