Sabia: Competition Bureau needs to OK TMX takeover
Published Thursday, February 23, 2012 6:39PM EST
MONTREAL - The president of Quebec's Caisse de depot says the Competition Bureau will create a "pretty serious problem" if it rejects Maple Group's proposed $3.8-billion acquisition of Canada's dominant stock market operator.
"I am quite optimistic now that this transaction will be completed," Michael Sabia said Thursday. "I think the Competition Bureau in Ottawa has had concerns.
Maple, a group of banks, pension funds and other financial companies, including the Caisse, struck a friendly deal last year to take over TMX Group (TSX:X), However, the transaction is still being reviewed by regulators.
"I believe a lot of good work has been done. I believe -- we'll see -- they're a bit more comfortable. Because, at the end of the day, you have to ask yourself the question, 'If this transaction doesn't go forward, where are we?' and where we are is nowhere."
Sabia was speaking at a news conference in Montreal to discuss the Caisse's 2011 results.
The TMX Group runs the Toronto Stock Exchange and TSX Venture exchange as well as energy trading and other businesses.
The Caisse, Canada's largest pension fund manager, is one of 13 financial institutions that are part of Maple Group. The group also includes Quebec-based financial companies National Bank and Desjardins Financial and the FTQ investment agency.
Sabia described Maple's bid as good for Quebec and for Canada as a whole
"So I very much hope that the officials in the Competition Bureau understand the nation-building importance of this and think very hard of what happens if this doesn't happen.
"Because I think they're going to find they will have created a pretty serious problem."
In an emailed statement Thursday, a Competition Bureau spokeswoman Alexa Keating said there are no new developments to report regarding the watchdog's ongoing review.
Commissioner Melanie Aitken communicated her "serious concerns" with Maple's proposed acquisition of TMX Group, Alpha and CDS in November, Keating said.
"It is important to understand that, under the Competition Act, the Bureau has an independent mandate to review mergers exclusively to determine whether they are likely to result in a substantial lessening or prevention of competition."
The consortium, which is also comprised of several Canadian banks, pension funds, investment firms and a life insurance company, announced at the end of January it was extending its takeover offer to Feb. 29.
It says it will keep extending the deadline until it receives a verdict from provincial and federal regulators, which are reviewing how the deal to amalgamate trading and clearing platforms would affect Canada's capital markets.
TMX Group's board originally supported a merger proposal with the London Stock Exchange Group and dismissed the Maple Group offer over a number of debt, competition and regulatory concerns.
But after the LSE deal failed to gain enough shareholder support in the face of the richer Maple bid this summer, the board turned its attention to the Maple offer.
Maple needs regulatory approvals to merge the owner of the Toronto Stock Exchange with the alternative Alpha Trading System, and clearing and depository firm CDS Inc.
Alpha and CDS are owned by the major players in the Canadian securities industry, several of which are part of the consortium.
Besides the Caisse and the Quebec entities, other investors in Maple Group are: Alberta Investment Management Corp., Canada Pension Plan Investment Board, CIBC World Markets, Dundee Capital, GMP Capital, Ontario Teachers' Pension Plan, Scotia Capital, TD Securities and Manulife Financial.