By Max Clarke
London Stock Exchange Group plc (LSEG) and TMX Group Inc. today announced an agreement to combine Europe and Canada's leading diversified exchange groups in an all-share merger of equals.
The merger will create a world-leading organisation and is unanimously being recommended by the Boards of both LSEG and TMX.
The combined transatlantic group (LSEG-TMX or the ‘Merged Group’) will be jointly headquartered in London and Toronto and will offer an international gateway, leading global pools of capital formation and liquidity together with a unique portfolio of highly complementary markets, products, technologies and services.
The Boards of LSEG and TMX believe that the merger is strategically compelling and will create a more diversified business with greater scale, scope, reach and efficiencies, generating substantial benefits for all stakeholders.
Commenting on today's announcement, Chris Gibson-Smith, Chairman of London Stock Exchange Group plc stated:
"We are today announcing the creation of a global leader in the exchange space. Building on our own shared long histories of excellence in capital markets, financial strength and cultures of internationally respected governance, I believe that together we will be able to offer shareholders and customers a business significantly greater than the sum of our parts. This merger comes at a hugely important time in the history of capital markets."
Wayne Fox, Chairman of TMX Group Inc. added:
"Two highly successful and profitable institutions are joining forces to create a more diversified and international company. This merger of equals will benefit shareholders, issuers, customers, employees and other stakeholders of both organisations. As important, it will have a positive impact on the business communities in Canada, the UK and Italy. I look forward to working with my fellow directors and the combined team to create one of the world's leading exchange groups."
The Board of the Merged Group will consist of fifteen directors, eight to be nominated by LSEG (of which it is envisaged three will be from Borsa Italiana), and seven to be nominated by TMX. Wayne Fox will be the non-executive Chairman of the Board of the Merged Group, and Chris Gibson-Smith and Paolo Scaroni will be Deputy Chairmen. Chris Gibson-Smith remains as Chairman of London Stock Exchange plc.
The executive management and senior leadership of the Merged Group will be drawn from a balance of leaders from both organisations and will be represented in its joint headquarters of London and Toronto as well as other core centres, including Calgary, Colombo, Milan, Montreal, Rome and Vancouver. Based in Toronto, the President, reporting to the CEO, will manage the Merged Group's business units, as well as drive the implementation of strategy, mergers & acquisitions, partnerships and strategic ventures.
The merger recognises the existing centres of excellence within the Merged Group and reinforces these strengths by assigning global responsibility across its geographic footprint, with global leadership in: Toronto for primary markets (listings and other issuer services across the Merged Group); Montreal for derivatives; and Calgary for energy. London will continue as a key centre for international listings with global responsibility for technology solutions, information services and post-trade services. For its part, Milan will be the centre for fixed income and equities trading, and European post-trade.
Montreal, Toronto, Milan and Colombo will remain centres of excellence in the development of technology for the Merged Group and for the expanding external technology services business.
Xavier Rolet, CEO of London Stock Exchange Group plc said:
"This is an incredibly exciting merger with considerable growth opportunities. We are creating the world's largest listings venue for the commodities, energy and natural resources sectors, as well as the premium market for small, mid-size and growth companies. This new international leader, marrying the right cost structure, financial strength, technological expertise and product portfolio, will be strongly positioned to capitalise on growth opportunities in emerging markets and deliver them to our customers in North America, Europe and beyond. Together, we will also be uniquely positioned to offer high-performance, low-cost technology solutions to our exchange clients around the world. We are aiming at nothing less than becoming a true powerhouse in the global exchange business."
Completion of the merger is subject to customary regulatory and other approvals, including approval by LSEG and TMX shareholders and court approval in Ontario. Each of LSEG's and TMX's markets will continue to be regulated in accordance with local requirements by their existing regulators. Provisions made to satisfy the requirements of the Investment Canada Act as well as Canadian provincial securities regulators will be made public.