London Stock Exchange’s $3.7 billion bid for TSE is dwarfed by bourses from Hong Kong to Brazil, according to a Bloomberg report.
There is an increasing sense among traders who profit from mergers and acquisitions that a higher offer will trump the London Stock Exchange Group Plc (LSE)’s deal for Toronto- based TMX Group Inc.
The report quoted Sachin Shah, a merger arbitrage strategist at Capstone Global Markets LLC in New York as saying, “LSE would be left out in the cold and they’d be forced to pursue another transaction.”
“The banks would not benefit strategically,” added Shah. “The money they would be paying would be to basically have a lockbox company and essentially put it out of the reach of the London Stock Exchange and any other foreign company.”
In fact, a group of Canadian banks is in talks with the nation’s pension funds on alternatives to LSE’s $3.1 billion bid to keep the Toronto Stock Exchange under local ownership. According to Bloomberg data, arbitragers are reportedly betting that a competing bid will emerge once LSE gains regulatory approval.
Carolyn Quick, spokeswoman for TMX, says the LSE-TMX is a read deal. She was quoted by the news source as saying, the “TMX Group remains completely focused on completing our agreement with London Stock Exchange.”
“We are convinced that this merger represents an unparalleled opportunity both for our company and for the Canadian capital markets,” she added.
LSE-TMX deal is part of more than $30 billion in takeover offers for exchanges in less than six months, as bourses try to cut costs and generate more revenue from trading in stocks, options and futures.
A takeover of TMX would create a $6.8 billion exchange, surpassing New York-based Nasdaq OMX Group Inc., ASX Ltd. of Sydney and Singapore Exchange Ltd. among the world’s biggest trading venues.