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A file phot of Stephen Jarislowsky. (John Morstad/The Globe and Mail)
A file phot of Stephen Jarislowsky. (John Morstad/The Globe and Mail)

Jarislowsky backs Maple bid for TMX Add to ...

Investment guru Stephen Jarislowsky is backing Maple Group's hostile bid for the TMX Group over a friendly merger with the London Stock Exchange Group.

Mr. Jarislowsky said Toronto does not need to help of London to build a global player in the stock trading business.

"The Maple business model is solid and will encourage the creation of an even stronger exchange that is able to attract attention on the international scene," Mr. Jarislowsky said in a statement released by Maple.

"For shareholders, a strong TMX Group is preferable to a merger with an exchange such as the London Stock Exchange, which is in decline."

Mr. Jarislowsky's endorsement comes as TMX shareholders prepare to vote on the merger deal next week.

The head of investment firm Jarislowsky Fraser was a key force in organizing support against the BHP Billiton hostile takeover offer for PotashCorp that was killed when Ottawa ruled the deal could not go ahead.

Two shareholder advisory services have recommended shareholders vote in favour of the LSE merger citing the increased debt the Maple deal would saddle the company with as well as regulatory concerns.

However, in an interview on Friday, Maple Group spokesman Luc Bertrand said that Maple's offer is getting unanimous backing from the large institutional shareholders he has talked to, which gives him confidence that Maple will quash the LSE offer.

"Without a doubt what we are proposing from a business plan standpoint gets unanimous support," Mr. Bertrand told the Business News Network.

"The majority of shareholders I've spoken to, they really sign onto the fact that we are creating this integrated exchange with our proposal, and that is very attractive for shareholders."

In a bid to help convince investors to vote for the LSE deal, TMX said this week that it would pay a special dividend of $4 per share.

The company also promised that it would continue to pay a dividend at least equivalent to the current quarterly rate of 40 cents per TMX share, instead of an earlier plan that would have seen TMX shareholders take a hit.

Maple Group responded by increasing its stock and cash offer to $50 per share, up from $48, and increasing the amount of cash available under the proposal.

The Toronto-London merger deal would see TMX shareholders receive 2.9963 shares in the new company for each TMX share to give them a roughly 45 per cent stake in the merged stock exchange operator.

Under the Maple bid, the consortium has offered to buy up to 80 per cent of TMX shares for $50 in cash each. That would be followed by a stock swap for the remaining shares that would see TMX shareholders end up with a minority stake in Maple.

Maple has set a minimum requirement of 70 per cent of the TMX shares be acquired for cash, a threshold that would see TMX shareholders hold a 41.7-per-cent stake in Maple. If the 80 per cent maximum percentage of shares are tendered for cash, TMX shareholders would hold a 27.8-per-cent stake in Maple.

Investors in the Maple consortium would hold the remaining interest in the company.

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  • TMX Group Ltd
  • Updated March 29 11:41 AM EDT. Delayed by at least 15 minutes.

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