Financial Regulatory Forum

LSE and TMX: ‘London Bridge’ shakes from staggering complexity

Office workers are seen in the London Place business district near Tower Bridge in central London February 9, 2011. REUTERS/Toby MelvilleBy John Mackie

Feb. 10 (Westlaw Business) The blockbuster merger bridging the London and Toronto Stock Exchanges may have been announced, but this London bridge may yet fall under the sheer weight of staggering legal complexity. A broad group, from AIM to Borse Dubai, and from the Montreal Exchange to Borsa Italiana, stand to be impacted by these issues. And what a set of issues it is, ranging from post-Potash foreign investment concerns to restrictive provincial securities laws to undertakings regarding corporate governance. Even legacy contractual commitments from past acquisitions by the TSX must be considered. Global markets affecting everything from equities to derivatives to venture funding await.

Of course, if it does stay standing, the London-Toronto structure, reported to be a $4 trillion transaction, would bridge not only the LSE and TSX, but also the venture-oriented AIM and TSX Venture Exchange, and significant foreign players including Borsa Italiana and Borse Dubai. Together, the parties represent 20 trading markets/platforms across North America and Europe, with major positions in equities, derivatives, energy and fixed income. The list of markets within the group also includes the Montreal Exchange, and the Natural Gas Exchange.

Once united, the combined group would become the global leader in number of listings (over 6,700), with a dominant position in natural resources, mining, energy and clean technology. Listed companies would include not only domestic Canadian and UK businesses, but many others with origins around the world that have turned to these exchanges for their access to deep capital pools and their expertise in industries from commodities to shipping. The megalith would offer listing, trading and post-trade services, along with global information services and technology solutions.

Facing these complex issues and opportunities, it comes as little surprise that the parties turned to the A-list for help. London Stock Exchange Group (LSEG) is represented by Osler, Hoskin & Harcourt LLP and Freshfields Bruckhaus Deringer LLP, with Barclays Capital, Morgan Stanley & Co. Limited and RBC Capital Markets acting as financial advisers. TMX Group, the parent company of the TSX, has turned to Torys for legal advice, with Bank of America Merrill Lynch and BMO Capital Markets acting as financial advisers to the Canadian company.

The merger will be implemented by means of a plan of arrangement in Ontario, under which TMX shareholders will exchange one share of TMX for 2.9963 shares of LSEG, a UK incorporated company which will continue as the holding company of the merged group. Following the transaction, LSEG shareholders will own 55% of the combined entity, and TMX shareholders will own 45%.

COLUMN – Iron ore concentration raises valid concerns: John Kemp

By John Kemp

LONDON, April 7 (Reuters) – In a new twist to the iron ore saga, Brazil’s giant iron ore producer Vale has launched a blistering counter-attack on European steelmakers, accusing them of coordinating their approach to ore negotiations in a manner that would raise issues under European competition law.

The accusations are contained in a letter to the European Commission, details of which have been released on the company’s website.

Vale strongly rejects allegations from the steelmakers it has broken European law in discussions about future supply agreements by exchanging information or pricing strategies with any competitor. All major producers insist the market is ferociously competitive.

  •