NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR PART, IN, INTO
OR FROM ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
TORONTO, June 23, 2011 /CNW/ - Maple Group Acquisition Corporation
("Maple"), a corporation whose investors comprise 13 of Canada's
leading financial institutions and pension funds, today commented on
the recommendation made by Institutional Shareholder Services Inc.
("ISS") to its clients regarding the proposed takeover of TMX Group by
London Stock Exchange Group plc ("LSE").
Speaking on behalf of Maple, Luc Bertrand said, "ISS has recognized that
Maple's offer provides greater value than the LSE take-over, and that
the LSE take-over remains subject to significant regulatory risk, and
yet recommends its subscribers approve the LSE take-over. We believe
the analysis investors will do for themselves will be more
sophisticated than what ISS has provided and will lead them to a very
different conclusion as to which transaction best serves their
interests. The choice is to receive at least $40 in cash from Maple,
plus an ongoing stake in an integrated trading and clearing group; or
to receive $4 of their own cash paid back to them by the LSE, plus an
ongoing stake in a combined LSE-TMX Group, the value of which will
largely depend on LSE's ability to generate the same kinds of benefits
it has failed to deliver from its take-over of the Borsa Italiana in
Mr. Bertrand added, "Shareholders must also understand - and we believe,
most do -- that if the LSE take-over is approved on June 30thand proceeds, the opportunity to consider Maple's superior offer will be
lost. Conversely, a vote against the LSE take-over on June 30th likely gives shareholders more time to consider their options."
Maple urges shareholders to consider the following points when
evaluating ISS's recommendation:
Maple's offer provides greater value and certainty than the LSE
take-over. In its report, ISS wrote: "After sweetening its offer to $50 late in the
evening of June 22, Maple Group's bid was again higher than the market
value of the [LSE] valuation…The increase in cash pro-ration from 70 to
80 percent also increases the certainty of value in the consideration.
All the incremental cash required for the sweetener will come from
increased equity commitments from the 13 Maple Group institutional
investors. At a $50 valuation, the Maple Group offer presents a premium
of approximately 25 percent over TMX's 20-day VWAP on May 12, the day
prior to the first announcement of Maple Group's offer."
A combined Maple-TMX Group would have an investment grade profile, debt
ratios well below TMX Group's own covenants, and the capacity from
existing cash flow to reduce leverage from 2.9x EBITDA to 2x EBITDA
within two years. Although it provides no analysis to support its view, ISS appears to
believe the leverage employed by Maple may have the effect of
"potentially limiting future growth strategies." Maple, whose investors
have considerable financial expertise and a clear and fully financed
vision for creating significant value through the acquisitions of Alpha
Group and CDS, disagrees with this view. Maple is investing over $2
billion of equity and has a fully-financed offer. With a combination of
investors and operators, Maple and its investors are confident in the
proposed capital structure.
At the LSE-TMX exchange ratio, the implied value of the LSE take-over at
yesterday's market close was $45.01 per share, as compared to the $50
per share value of Maple's offer. ISS based its report on the incorrect assumption that TMX Group
shareholders would receive the implied value of the LSE-TMX Group
exchange rate, plus the $4 special dividend. This is incorrect for the simple reason that
the money that will be used to pay that dividend (and the equivalent
amount being paid as a dividend to LSE shareholders) would come off of
the combined company's balance sheet. By doing so, the LSE has in some
small measure changed the form of consideration being offered, but not
the amount. In fact, the value of the Maple offer is currently $5 per
share more than the implied value of the LSE take-over. While ISS notes
that the current value of LSE's shares may be inflated by speculation
that the LSE is a take-over target, it does not disclose how much value
it assigned to that probability in analyzing the long-term value of the
LSE take-over. ISS also does not appear to have factored into its
analysis that Maple's offer will be 22% accretive to TMX Group's 2012
The LSE transaction remains subject to a "welter of regulatory and other
approvals". In its report, ISS wrote: "Certainty of the [LSE] offer is also affected
by the welter of regulatory and other approvals required for
consummation of the transaction... Among other reviews, the merger
requires approval of provincial securities regulators in Ontario and
Quebec, since LSE is proposing to acquire more than 10% of TMX.
Hearings before these regulators are scheduled for July; no firm date
for a regulatory determination has yet been established."
Yet, despite these and other significant uncertainties facing the LSE
transaction, ISS advises its subscribers to consider the LSE
transaction to be a "bird in the hand".
The LSE take-over is a change of control transaction without a
change-of-control premium. ISS believes TMX shareholders would "not cede control" under the LSE
take-over. This is at odds with the facts. Under an LSE take-over, LSE
shareholders will own a majority of the combined company, directors
appointed by the LSE will comprise a majority of the Board, the number
of directors appointed by TMX Group may be substantially diluted over
time, and the holding company will be regulated by the UK's Financial
Services Authority. The LSE and TMX Group may claim their deal is a
"merger of equals", presumably to justify a nominal premium and to
appeal to Canadian provincial and federal regulators, but it is in fact
ISS puts its recommendation in the context of global exchange
consolidation but there is little evidence to suggest the LSE's
strategic rationale can or will create value for TMX shareholders. Maple's offer provides the certainty of significant cash consideration,
plus the upside potential from an ongoing ownership stake in an
integrated clearing and exchange model that has been employed with
great success - and to the benefit of market participants and
shareholders alike - in Australia, Hong Kong and Germany. With an
integrated business model and the support of 13 institutions with
approximately $1 trillion in international assets and investments,
Maple has the global orientation and vision to capitalize on
opportunities outside of Canada from a position of strength over time.
By contrast, ISS did not recognize that the LSE promised - and failed to
deliver on -- many of the same kinds of benefits it is currently
promising the TSX in its 2007 take-over of Borsa Italiana.
the LSE said its acquisition of the Borsa would enlarge the liquidity
pool available to listed companies in Italy, yet since the acquisition,
the average daily value of Borsa trades has declined by approximately
54% and the average daily volume of contracts traded has declined by
the LSE said its acquisition would create cross market access
opportunities for international listings, yet listings on the Borsa and
its MTA international segment are down.
the LSE said it would leverage AIM to create a new growth market
targeted at Italian issuers, yet the number of new IPOs in 2010 was
down by nearly 45% compared to 2007.
the LSE said it would join forces with the Borsa to create a
pan-European derivatives platform, yet the daily notional turnover for
standard equity derivative contracts on the Borsa is down 45% since
2007 and there has been no integration of the Borsa's IDEM derivatives
business into a pan-European platform, nor has it enhanced the
derivatives business in the local Italian market.
In addition, during the period since the LSE's acquisition of Borsa
Italiana in June 2007, the value of TMX Group shares have increased
while the value of LSE shares has declined by 29%.
Details of Maple's enhanced offer will be available in Maple's notice of
variation, which will be filed on SEDAR and mailed to TMX Group
shareholders shortly. A copy of the notice of variation will also be
available at www.abetterexchange.com.
Maple Urges TMX Group Shareholders to Vote AGAINST the LSE Take-over
Plan and to Deposit their shares to Maple's Superior Offer
Maple urges TMX Group shareholders to carefully consider Maple's
enhanced offer and then take two important actions:
Vote AGAINST the LSE take-over plan by signing, dating and returning the YELLOW proxy
before 12:00 Noon (Eastern time) on June 28, 2011; and
DEPOSIT their shares to Maple's offer before it expires at 5:00 p.m. (Eastern
time) on August 8, 2011 (unless it is extended or withdrawn) by
following the instructions provided in the circular.
TMX Group shareholders are encouraged to call Kingsdale Shareholder
Services if they have questions or would like assistance voting their
shares and depositing their shares to the Maple offer. Shareholders can
reach Kingsdale by email at email@example.com, or by calling toll-free at 1-888-518-1556 (English or Français). Banks
and brokers can call collect at 1-416-867-2272.
About Maple Group Acquisition Corporation
The investors in Maple Group Acquisition Corporation are: Alberta
Investment Management Corporation, Caisse de dépôt et placement du
Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc.,
Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de
solidarité des travailleurs du Québec (F.T.Q.), GMP Capital Inc.,
National Bank Financial Inc., Ontario Teachers' Pension Plan, Scotia
Capital Inc., TD Securities Inc. and The Manufacturers Life Insurance
This press release is not intended to and does not constitute or form
part of an offer or invitation to sell or purchase any securities, the
solicitation of an offer to buy or sell any securities or an offer to
exchange or otherwise acquire any securities, in any jurisdiction,
whether pursuant to the offer described in this press release or
otherwise. The circular contains important information and TMX Group
shareholders are urged to read it carefully before any decision is made
with respect to the offer.
The distribution of this press release in jurisdictions other than
Canada may be restricted by law and therefore any persons who are
subject to the laws of any jurisdiction other than Canada should inform
themselves about, and observe, any applicable requirements. This press
release does not purport to comply with the laws of any non-Canadian
jurisdiction and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared
in accordance with the laws of jurisdictions outside Canada.
Information for U.S. Shareholders
The offer is being made for the securities of a Canadian company that
does not have securities registered under Section 12 of the U.S.
Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act").
Accordingly, the offer is not subject to Section 14(d) of the U.S.
Exchange Act, or Regulation 14D promulgated by the U.S. Securities and
Exchange Commission (the "SEC") thereunder. The offer is being
conducted in accordance with Section 14(e) of the U.S. Exchange Act and
Regulation 14E promulgated by the SEC thereunder (with settlement being
subject to a longer period than would typically apply for securities of
U.S. public companies).
The Maple shares to be issued to shareholders (including U.S.
shareholders) other than Maple pursuant to the plan of arrangement have
not been, and will not be, registered under the U.S. Securities Act of
1933, as amended (the "U.S. Securities Act"), or under the securities
law of any state or other jurisdiction of the United States. The Maple
shares to be issued pursuant to the plan of arrangement will be issued
in reliance upon the exemption from the registration requirements of
the U.S. Securities Act provided by section 3(a)(10) thereof and only
to the extent that corresponding exemptions from the registration or
qualification requirements of state "blue sky" securities laws are
All dollar references in this press release are in Canadian dollars. On
June 22, 2011, the Bank of Canada noon rate of exchange for U.S.
dollars was CDN. $1.00 - U.S. $1.0282.
Notice To Shareholders In The United Kingdom And European Economic Area
The offer is only being made within the European Economic Area ("EEA")
pursuant to an exemption under Directive 2003/71/EC (together with any
applicable adopting or amending measures in any relevant member state
(as defined below), the "Prospectus Directive"), as implemented in each
member state of the EEA (each, a "relevant member state"), from the
requirement to publish a prospectus that has been approved by the
competent authority in that relevant member state and published in
accordance with the Prospectus Directive as implemented in that
relevant member state or, where appropriate, approved in another
relevant member state and notified to the competent authority in that
relevant member state, all in accordance with the Prospectus Directive.
Accordingly, in the EEA, the offer and documents or other materials in
relation to Maple Shares are only addressed to, and are only directed
at, (a) qualified investors in a relevant member state within the
meaning of Article 2(1)(e) of the Prospectus Directive, as adopted in
the relevant member state, and (b) persons who hold, and will tender,
the equivalent of at least €50,000 worth of TMX Shares (collectively,
"permitted participants"). These documents may not be acted or relied
upon by persons in the EEA who are not permitted participants.
With reference to the U.K. Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the "Order"), the offer
and any materials in relation to Maple Shares is only directed at
persons in the United Kingdom that are (a) investment professionals
falling within Article 19(5) of the Order or who fall within Article
49(2)(a) to (d) of the Order; (b) holders of TMX Shares at the time of
communication of the offer and such materials; or (c) persons to whom
they may otherwise lawfully be communicated (collectively, "relevant
persons"). In the United Kingdom, Maple Shares are only available to,
and the offer may only be accepted by, relevant persons who are also
permitted participants, and as such, any investment or investment
activity to which this document relates is available only to, and may
be relied upon only by, relevant persons who are also permitted
Caution Regarding Forward-Looking Information
This document contains "forward-looking information" (as defined in
applicable Canadian securities legislation). This information is based
on the current expectations, assumptions, projections, estimates and
other factors that the management of Maple and its investors believe to
be relevant as of the date of this document. This information is
naturally subject to uncertainty and changes in circumstances. The
forward-looking information contained in this document includes, but is
not limited to, statements relating to the proposed acquisition of TMX
Group by Maple, and the effects thereof, and the proposed subsequent
combination with Alpha Group and CDS, and the effects thereof, and
other statements other than historical facts.
Often, but not always, forward-looking statements and forward-looking
information can be identified by the use of the words ''expect'',
''will'', ''intend'', ''estimate'', ''may'' and similar expressions.
Forward-looking statements are necessarily based upon a number of
factors, estimates and assumptions that, while considered reasonable by
Maple and its investors, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
Readers are cautioned that such forward-looking statements and
information involve known and unknown risks, uncertainties and other
factors that may cause the actual financial results, performance or
achievements of Maple and/or its subsidiaries to be materially
different from the estimated future results, performance or
achievements expressed or implied by those forward looking statements
and information and the forward-looking statements and information are
not guarantees of future performance. These risks, uncertainties and
other factors include, but are not limited to: the satisfaction of the
conditions to the proposed acquisition of TMX Group, failure to acquire
Alpha Group or CDSL; the inability to successfully integrate TMX
Group's operations with those of Alpha Group and CDSL, including,
without limitation, incurring and/or experiencing unanticipated costs
and/or delays or difficulties; future levels of revenues being lower
than expected; conditions affecting the industry; local and global
political and economic conditions; unforeseen fluctuations in trading
volumes; competition from other exchanges or marketplaces, including
alternative trading systems and new technologies, on a national and
international basis; foreign exchange rate fluctuations and interest
rate fluctuations (including from any potential credit rating decline);
legal or regulatory developments and changes; the outcome of any
litigation; the impact of any acquisitions or similar transactions;
dependence on the economy of Canada; competitive products and pricing
pressures; success of business and operating initiatives; failure to
retain and attract qualified personnel; failure to implement
strategies; dependence on information technology; dependence on
adequate numbers of customers; risks associated with clearing
operations; inability to protect intellectual property; the adverse
effect of a systemic market event on the derivatives business; risks
associated with integrating the operations, systems, and personnel of
new acquisitions; dependence on market activity that cannot be
controlled and/or conditions in the securities market that are less
favourable than expected; and changes in the level of capital
investment. Other factors could also cause actual results to differ
materially from those in the forward-looking information.
Actual results, events, performances, achievements and developments are
likely to differ, and may differ materially, from those expressed or
implied by the forward-looking information contained in this document.
Maple and its investors make no representations as to present or future
value or the present or future trading price of any security, including
Given these risks and uncertainties, investors should not place undue
reliance on forward-looking information as a prediction of actual
results. Neither Maple nor its investors nor any of their respective
affiliated companies undertakes any obligation to update or revise
forward-looking information, whether as a result of new information,
future events or otherwise, except to the extent legally required.
SOURCE Maple Group Acquisition Corporation
For further information:
TMX Group shareholders:
Kingsdale Shareholder Services Inc. Toll-free 1-888-518-1556 (English and Français)