By Gurmukh Singh
Toronto, Feb 15 (IANS) Canada Monday announced that it will review the proposed mega merger of the Toronto Stock Exchange with the London Stock Exchange.
The TMX Group, which operates the stock exchanges in Toronto and Montreal, had announced last Tuesday that "it is in advanced discussions with London Stock Exchange Group regarding a possible merger of equals to create an international exchange leader.''
Under the merger deal, the LSE will buy the TMX Group to form a nearly $7-billion securities market - one of the biggest in the world - with two main offices in Toronto and London. While Toronto would be the hub for equity listings, Montreal would serve as the centre for derivative trading, and Calgary for the energy group.
After the proposed merger was announced last week, Dwight Duncan, finance minister of Ontario province where the Toronto Stock Exchange lies, raised objections by declaring that the TSE is a "strategic asset.''
Any decision about the future of the TSE should be made after taking public interest into consideration, not just shareholder interests, he had said.
The Canadian government, which last year blocked the the $38.6-billion takeover of the country's PotashCorp by the Australian mining giant BHP Billiton, intervened in the matter Monday, saying that the deal will be subjected to a 'through review' behind closed doors.
"I can confirm today that this transaction is in fact subject to review under the Investment Canada Act,'' Canadian industry minister Tony Clement said.
He said the review will begin soon after the government gets the application for the merger.
"I only approve an application where an investment demonstrates that it is like to be of net benefit to Canada,'' he said.
In response, the TMX Group said the merger partners are ready for any review by Industry Canada (the industry ministry).
"The companies have worked together to develop a set of undertakings that deliver clear benefits to Canada and Canada's capital markets, while preserving financial regulation in Canada,'' the owner of the Toronto Stock Exchange said in a statement.
The 150-year-old Toronto Stock Exchange is the third largest market in North America after New York and Chicago.