Some of Canada's biggest banks may want the merger of TMX Group and London Stock Exchange Group PLC stopped, but a majority of Ontario executives in a new poll say that the deal should be allowed to go ahead.
TMX Group commissioned a poll that asked 111 top executives at Ontario companies that are listed on the Toronto Stock Exchange or the TSX Venture Exchange "Based on what you know so far, would you say that you support, oppose, or have no opinion about the proposed merger?" Fifty-two per cent said they either "strongly support" or "somewhat support" the transaction, while 38 per cent said they "somewhat oppose" it or "strongly oppose it." A further 10 per cent said they didn't know.
When asked what impact the deal would have on the executives' own business, 42 per cent answered that it should be "somewhat" or "very positive" while 18 per cent said it would be "somewhat" or "very negative." The balance said it should have no impact.
The poll, performed by The Gandalf Group in the latter half of March, focused on Ontario because Ontario regulators are among those that must approve the proposal. The survey was taken after three of Canada's biggest banks came out publicly against the deal, and shows that despite the vocal campaign to halt the deal by bankers such as Toronto-Dominion Bank chief executive officer Ed Clark and National Bank of Canada head Louis Vachon, the Ontario business community remains open to the transaction.
The survey also shows that for the most part, the transaction has not captured the attention of those in business. Most of those who responded said they are paying only "some" or "not very much" attention to the deal, with only 19 per cent saying they were giving it "a great deal" of their attention. That may suggest that there's little groundswell at this point to push politicians to oppose the deal as happened in the Potash Corp. of Saskatchewan situation, when heavy opposition in Saskatchewan to the sale of Potash led to a successful push by provincial politicians to have the deal blocked.
"This is not something that has the business community in Ontario riveted," said David Herle, a principal at Gandalf Group.
The results mirrored an informal poll The Globe and Mail took of the companies in the TSX 60 index in the days after the transaction was announced in early February, which showed that a large number of those who did respond were neutral. A smaller group was skeptical but nobody at all who responded said that regulators should stop the deal. (The three big banks who are opposed made their position public weeks later.) The TMX's argument that the deal should help companies access more investors seems to be resonating with some executives. When asked by Gandalf Group whether the transaction will make it easier to raise capital, 41 per cent of the executives said that it should be much easier or somewhat easier, while 50 per cent said it should make no difference. Only 9 per cent said it would be somewhat or much more difficult.
The results in the TMX-commissioned poll did show some concern about the potential effect on the Toronto financial sector and Toronto's status as a hub for markets and banking. For example, when asked about the effect on Toronto's status as a world financial centre, 14 per cent said that they think Toronto would "lose out significantly" and a further 21 per cent said the city would "lose out somewhat." Even so, the majority said that the city should be better off or not affected. Some 14 per cent said Toronto would "win significantly" and 32 per cent more said it would "win somewhat." Nineteen per cent said that the city would not be affected.
"Change is easy to be concerned about because the status quo is pretty good," said Ronald Alepian, head of marketing and communications at TMX Group. He said he took the survey results as a positive, because they indicate that most executives are not set in solid opposition to the transaction.
"This is a strong position to build on, and means that people are listening and as they become informed are more and more comfortable or even excited by the potential," he said.