The announcement scuttles a C$3.6 billion bid for Toronto parent TMX Group that had been part of a wave of consolidation in the stock market world, highlighted by German-based Deutsche Boerses $10 billion takeover of Big Board parent NYSE Euronext (NYSE:NYX).
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The move could also clear the way for a richer buyout bid from Maple Group Acquisition Corporation, which is made up of 13 of Canadas financial institutions and pension funds attempting to keep TMX in Canada.
TMX said that while a majority of its shareholders casted a vote in support of the London deal, it was clear the two-thirds threshold required for approval would not have been achieved.
The failure to achieve enough votes is a setback for TMX management and culminates a fourth-month public debate about the future of the company.
The TMX Group management and board believe that the TMX-LSEG merger would accelerate our business strategy and create shareholder value, while enhancing the performance of Canada's capital markets, TMX CEO Tom Kloet said in a statement. Although we will not join forces with LSEG, our business is strong and I have enormous confidence in the continued success of our company.
Shares of TMX in Toronto hit session highs on the announcement and were recently up 0.78% to $43.90.
TMX said it plans to "continue to pursue its growth objectives" and will review its "opportunities," including the Maple offer. Last week Maple boosted its takeover bid for TMX to C$49,or C$3.8 billion, up from C$48. The Maple deal also includes a C$4 dividend.
However, proxy groups had favored the less lucrative London deal.
TMX said it has agreed to pay LSEG a $10 million expense fee and a further $29 million fee if the company agrees to a buyout with Maple within the next 12 months.