Ontario Businessmen In Favour Of TMX-LSE Merger

by Mike Godfrey, Tax-News.com, Washington

07 April 2011

Ahead of the release by an Ontario committee of its report into the impact of the proposed TMX-LSE merger, a survey of 111 Ontarian business executives has shown that a majority of those interviewed support the transaction, and see it as having either a positive effect or no impact at all on their businesses.

In a survey conducted on behalf of the TMX Group, which is seeking a merger with the London Stock Exchange (LSE), executives at 111 Ontario businesses listed on either the Toronto Stock Exchange (TSX) or the TSX Venture Exchange were interviewed to ascertain their opinions on the projected impact the deal was likely to have. When questioned, a majority professed to having paid either "some" or a "great deal" of attention to the developing situation, but 23% admitted having paid either "not very much" or no attention at all to the issue. Nonetheless, by a majority of 14%, those executives interviewed support the merger proceeding, with varying degrees of enthusiasm, with only one in ten strongly opposed to its implementation. As the survey states: "Executives are divided between those who see positive impact from the merger and those who see little or no impact from the merger. Few executives see anything negative for their companies resulting from the merger".

Of those questioned, 52% are said to have supported the deal, of which 19% “strongly support” it, with 33% choosing to state a more moderate opinion of "somewhat support". Against this, 27% "somewhat opposed" the merger, 11% "strongly opposed" and 10% "didn't know." In the case of what likely impact the transaction is perceived to have, opinion again tended towards the more moderate positions. 46% believe that it will have no impact at all, 35% feel it will be "somewhat positive," and 16% "somewhat negative," whereas, at the extreme ends of the spectrum, only 7% saw it as having a very positive impact, and a mere 2% argued it would be "very negative." This same range is again evident from the answers to the query as to whether the merger would ease a company's ability to raise capital in the markets. 50% said it would make no difference, with 34% feeling it would make matters "somewhat easier."

In addition to the survey's release, TMX CEO Thomas Kloet has also been attempting to drum up support for the merger at the Toronto Board of Trade, where he said the proposal "is about opening new avenues for growth while preserving and protecting the enviable leadership we already have." Speaking on April 4, Kloet once again sought to reassure Canadians that the country would not lose regulatory authority or sovereignty over its markets, but that, instead: "Regulatory power will remain 100% Canadian with absolutely no foreign oversight of our exchanges or the Canadian public companies listed on them."

Rather, what has been proposed "is a pooling of ownership at the holding company level - not a merger of the exchanges themselves," Kloet said. What will be created is a "new company that has the financial base, global reach and mix of assets to compete and win," he added.

On April 7, a cross party committee of Canadian MPs will release a report, following its investigation into the transaction. It will illustrate the committee's considerations of the impact the merger is expected to have on Ontario's economy and population, Toronto's financial services sector and Northern Ontario's mining industries.

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