TMX-LSE merger plan reflects global consolidation trends, but with hurdles ahead
- Source: Xinhua
- [10:31 February 13 2011]
- Comments
The proposed multibillion-dollar union of the TMX Group Inc., the operator of the Toronto Stock Exchange (TSX), and the London Stock Exchange Group Plc., dominated the business press in Toronto after the deal was announced on Wednesday, signaling to many another wave of mergers and acquisitions as the world economy is finally climbing out of the doldrums of the global financial crisis.
Indeed the nearly 7 billion U.S. dollars TMX-LSE merger followed Singapore Exchange Ltd.'s 8.35 billion U.S. dollars takeover bid of ASX Ltd., the parent of Australia's main stock exchange, while another pact to create South America's largest equity market is winding its way through the legislative corridors.
A few hours after the TMX-LSE deal was announced, it was confirmed that Deutsche Boerse AG was in advanced talks to buy NYSE Euronext, creating a behemoth that would dwarf all the world' s financial exchanges.
JOINT ENTITY TO DOMINATE MINING, RESOURCES TRADING
The TMX-LSE merger would create the world's fourth largest stock exchange in annual trading volume, with more than 6,700 listings in 20 exchanges and trading venues in seven countries, and total equity market capitalization of 5.8 trillion dollars.
More importantly, by combining the world's two largest exchanges for the shares of mining, oil &gas and other resources companies, the new entity would dominate the listing and trading of financial instruments in the booming global commodities and natural resources sector.
The two chief dealmakers, the CEOs of TMX and LSE, extolled the virtues of the merger through cost synergy and increased strength in the resources sector and emerging markets.
"This new international leader, marrying the right cost structure, financial strength, technological expertise and product portfolio, will be strongly positioned to capitalize on growth opportunities in emerging markets and deliver them to our customers in North America, Europe and beyond," said Xavier Rolet, the CEO of LSE.
