News Release

TMX Group Inc. Statement Regarding Maple Proposal

May 20, 2011

May 20, 2011 (TORONTO) - TMX Group Inc. responded today to the proposal provided by Maple Group Acquisition Corporation ("Maple") on May 13, 2011. The TMX Group Board of Directors has considered Maple's proposal and has determined, after consultation with its financial advisors and outside counsel, that for purposes of its merger agreement with London Stock Exchange Group plc ("LSEG"), the Maple proposal does not constitute a superior proposal nor could it reasonably be expected to result in a superior proposal.

"The Board supports TMX Group's proposed merger with LSEG to form a globally competitive yet domestically focused exchange group with strong opportunities for growth," said Wayne Fox, Chair, Board of Directors, TMX Group. "The Board's view is that the merger with LSEG continues to be in the best interests of TMX Group and its shareholders and stakeholders."

The Board's Determination

In making its determination, the Board considered a number of factors, including the following:

  • Having considered the advice of its financial advisors among other things, the Board believes that the financial consideration proposed by Maple is inadequate given that the Maple proposal entails a change of control of TMX Group.
  • There is a significant increase in leverage associated with the Maple proposal, which contemplates increasing TMX Group's debt to approximately 2.9x LTM EBITDA from 1.1x LTM EBITDA currently. This leverage generates much, if not all, of the earnings accretion referenced in the Maple proposal and could constrain TMX Group's ability to execute and implement strategic opportunities in the future without providing offsetting business benefits to TMX Group.
  • There is inadequate information in the Maple proposal regarding Maple's future business plans and strategy for TMX Group, particularly with respect to its projected domestic operating model and plans for international growth and expansion, nor does the proposal identify the senior management team who will be responsible for developing the business plans and strategy going forward.
  • The Maple proposal does not provide information regarding the values of Alpha Group and CDS, nor of the economic terms upon which they would be combined with TMX Group, bringing significant uncertainty to the value of the non-cash component of Maple's proposal, which constitutes a material component of the proposed consideration.
  • The Maple proposal contains significant execution risk associated with its closing condition of regulatory approval for Maple's acquisition of Alpha Group and CDS. The Maple proposal also does not describe what steps Maple would be willing to take to secure the required regulatory approvals.
  • Under the Maple proposal, TMX Group and TMX Group Shareholders bear all of the regulatory risk and the Maple proposal contains no compensation for TMX Group if regulatory approvals are not received.

Merger with LSEG

TMX Group entered into the merger with LSEG as the best path forward for TMX Group, its shareholders and stakeholders. The merger provides the opportunity for TMX Group and its shareholders to participate in the creation and on-going growth of a new, globally competitive exchange group, with several important benefits expected for stakeholders, including:

  • The acceleration of TMX Group's growth plans.
  • Preservation of TMX Group's businesses in Canada, particularly its regulatory advantages and its deep know-how and world leading capabilities in resource and small and medium enterprises.
  • Opportunities for Canadians to play a meaningful role in building a global leader in the exchange sector.
  • An improved ability to attract new foreign investment to Canada and to facilitate access to the world's largest international capital pool for Canadian issuers of all sizes.
  • An opportunity to achieve global leadership in derivatives trading and clearing, including through the continued development of leading-edge technology.
  • The ability to market Canadian trading technology leadership to exchange operators and businesses around the world.
  • A strengthening of Canada's brand and leadership on the world stage.

The expected benefits of the proposed merger are described in detail in the applications of TMX Group and LSEG to each of the Ontario Securities Commission, the Autorité des marchés financiers, the Alberta Securities Commission and the British Columbia Securities Commission dated May 13, 2011 which are posted on the websites of each of those entities. The benefits of the merger with LSEG will be achieved while guaranteeing existing local regulation and oversight over all Canadian regulated exchanges currently in TMX Group, including Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange and NGX.

The Board has directed that the efforts that are currently underway to secure the necessary regulatory and shareholder approvals required to complete the proposed merger with LSEG be continued.

The Maple Proposal

Maple was formed by a group of nine investors, including Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), National Bank Financial Inc., Ontario Teachers' Pension Plan Board, Scotia Capital Inc. and TD Securities Inc.

Under the Maple proposal, on a fully prorated basis, each share of TMX Group would be exchanged for $33.52 in cash plus 0.3016 of a share of Maple. According to the Maple proposal, after giving effect to it, the existing TMX Group Shareholders would own approximately 40% of Maple's outstanding shares, Maple's pension fund investors would own approximately 35% of Maple's outstanding shares and Maple's bank-owned investors would own approximately 25% of Maple's outstanding shares.

The Maple proposal contemplates that TMX Group, once controlled by Maple, would subsequently combine with Alpha Group and CDS, subject to approval of the shareholders of those entities. The proposal does not contain the terms upon which this combination would take effect or confirm that the shareholders of those entities would agree to such combination.

Under the Maple proposal, Maple's bank and pension fund investors would appoint eight nominee directors, with additional independent directors to be determined in consultation with TMX Group. Each bank and pension fund investor would have the on-going right to nominate one director each year for election for so long as such investor holds at least 5% of Maple's outstanding shares.

The financing for the Maple proposal would consist of equity capital contributions by each of the Maple investors or their affiliates, and unsecured debt financing from a syndicate of Canadian banks. Maple's proposal anticipates outstanding debt of approximately $1.1 billion if it were to be completed. Maple has also stated that it expects the transaction to be significantly accretive to TMX Group's earnings per share (adding approximately $0.50 to TMX Group's consensus 2012E EPS of $3.48), even without the benefit of Maple's potential combination with Alpha Group and CDS. Maple also has stated that it plans to maintain TMX Group's current annual dividend.

The Maple proposal is subject to a number of significant conditions, including:

  • receipt of all competition/anti-trust approvals considered necessary or desirable by Maple, all on terms and conditions satisfactory to Maple, acting reasonably, including approval for the combination of TMX Group with both Alpha Group and CDS;
  • receipt of all securities regulatory authorities approvals, consents and confirmations considered necessary or desirable by Maple, all on terms and conditions satisfactory to Maple, acting reasonably, including approval for the combination of TMX Group with both Alpha Group and CDS; and
  • approval of the proposal by TMX Group shareholders.

Caution Regarding Forward-Looking Information

This press release contains "forward looking information" (as defined in applicable Canadian securities legislation) that is based on expectations, estimates and projections as of the date of this press release. Examples of forward looking information can be identified by the use of forward-looking words such as "plans", "expects", and "expected". Forward looking information, by its nature, requires us to make assumptions and is subject to significant risks and uncertainties which may give rise to the possibility that our expectations or conclusions will not prove to be accurate and that our assumptions may not be correct. These factors, many of which are beyond our control, include: market competition; business and economic conditions generally; the level of trading and activity on our markets, and in particular trading in our key products. Additional information about these and other factors are located in reports filed with Canadian securities regulators.

We have no intention to update this forward looking information, except as required by applicable securities law. This forward looking information should not be relied upon as representing our views as of any date subsequent to the date of this press release.

About TMX Group (TSX-X)

TMX Group's key subsidiaries operate cash and derivative markets for multiple asset classes including equities, fixed income and energy. Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange, Canadian Derivatives Clearing Corporation, Natural Gas Exchange, Boston Options Exchange (BOX), Shorcan, Shorcan Energy, Equicom and other TMX Group companies provide listing markets, trading markets, clearing facilities, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across Canada (Montreal, Calgary and Vancouver), in key U.S. markets (Houston, Boston and Chicago) as well as in London. For more information about TMX Group, visit our website at www.tmx.com.

For more information please contact:

Carolyn Quick
Director, Corporate Communications
416-947-4597
carolyn.quick@tmx.com