London Stock Exchange’s bid for Canada’s TMX Group fails

The London and Toronto stock exchanges have abandoned plans for a $3.4-billion tie-up, leaving both in play in a world facing a wave of exchange consolidation.

The failure of the bid from the London Stock Exchange for TMX Group opens the door to a hostile offer for the operator of the Toronto Stock Exchange from Canada’s Maple Group consortium, a made-in-Canada alternative to a takeover that would have put a big domestic asset in foreign hands.

It also turns the spotlight on the London Stock Exchange as a target as exchanges consolidate to grow and broaden their geographic reach, as well as to fight off rivals and new market entrants.

Nasdaq OMX Group, smarting from its own failure in the U.S. to buy New York Stock Exchange parent NYSE Euronext, could be a contender for an alternative transatlantic combination with the London Stock Exchange.


“While the failed deal probably puts an end to TMX’s M&A ambitions, other exchange operators will likely continue to look for partners. This reinforces my belief that we should expect more mergers, not less,” said Ed Ditmire, a New York-based analyst for Macquarie Securities.

The failure Wednesday of the London Stock Exchange’s bid for TMX, a high-profile deal that was months in the making, follows Singapore Exchange’s scuttled bid for Australia’s ASX in the latest sign that nationalism and pride are frustrating cross-border deals for highly symbolic capital markets.

And it’s a black eye for London Stock Exchange Chief Executive Xavier Rolet, who banked his reputation on sealing the deal.

Rolet was to have led a London Stock Exchange-TMX group, which would have been a heavyweight global player and No. 1 in listing energy and mining companies.

But the support he got from TMX’s management and board wasn’t enough to overcome opposition from within Canada’s tightknit banking sector.

Four of Canada’s biggest banks are the lead players in the bid from Maple Group, a consortium that also includes pension funds and financial services firms. Canada’s other two big banks were advisors to the LSE proposal.