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Maple's TMX deal inches closer as regulator offers olive branch

National Bank's Luc Bertrand heads up Maple Group Acquisition Corp., the consortium of banks and brokerages that has made a bid for TMX Group Inc., operator of the Toronto Stock Exchange.

Michelle Siu/The Globe and Mail/Michelle Siu/The Globe and Mail

The group of 13 banks and financial institutions that wants to buy TMX Group Inc is a step closer to its goal after the Competition Bureau gave positive feedback on the proposed deal, but it's still unclear if that's enough to convince the so-called Maple Group to keep up its year-long quest to acquire the exchange operator.

Competition Bureau approval for the deal has been a hurdle for the plan for TMX to be acquired by Maple, which includes financial institutions such as Toronto-Dominion Bank and Quebec's Caisse de dépôt et placement du Québec. Maple wants to combine TMX with the bank-backed Alpha trading system, TMX's biggest competitor, and fold in the currently non-profit stock clearing system run by CDS, which would then become for-profit. The bureau had signalled late last year that it had "serious concerns" with both parts of the transaction.

Maple said in an announcement Friday that the Competition Bureau now says that there may be a way to address its concerns. The Competition Bureau told Maple that the rules that the Ontario Securities Commission is contemplating putting in place for the merged company "may materially change the regulatory environment such that the Bureau's serious concerns may be substantially mitigated." A draft of those rules is expected any day.

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The Competition Bureau's statement is a big win for Maple, as some members of the consortium were growing frustrated with the slow pace of the regulatory process. Some members were even said in recent days to be considering backing out because of the drawn-out timetable and because of the costs of complying with regulators' demands.

TMX shares soared on the news, rising 4.6 per cent to $44.70, taking them closer to the $50-a-share offer from Maple, reflecting increased investor optimism that the deal will go ahead.

Still, it's no sure thing. Maple's members now must decide if they have made enough progress on the regulatory front to continue with their bid, which lapses at 5 p.m. Eastern time on Monday unless it is extended. Maple said that its members have yet to decide whether to do so.

"In considering any further extensions of the offer beyond April 30, 2012, in addition to assessing the status of the regulatory approval process, Maple must be satisfied with the progress of its discussions with Alpha, CDS and their security holders in respect of the proposed acquisitions of Alpha and CDS, as well as all other circumstances affecting the Maple transaction," the group said in a statement.

Maple said that the group intends to extend the offer "if Maple is satisfied with those matters. However, there can be no assurance at this time that the offer will be further extended."

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