Maple and TMX Group Note Publication of Draft and Final Recognition Orders by the OSC and AMF
TORONTO, May 3, 2012 –Maple Group Acquisition Corporation ("Maple"), a corporation whose investors comprise 13 of Canada's leading financial institutions and pension funds, and TMX Group Inc. (“TMX Group”) (TSX:X) today noted that the Ontario Securities Commission (“OSC”), and the Autorité des marchés financiers ("AMF") have published draft and final recognition orders and notices of public comment with respect to Maple's proposed acquisition of TMX Group and related transactions.
The OSC is asking for public comment on whether or not the recognition orders and the terms and conditions proposed by the OSC in respect of Maple's proposed acquisition of TMX Group and The Canadian Depository for Securities Limited (“CDS”) constitute an appropriate basis on which to conclude that these acquisitions are in the public interest. The OSC's notice invites public comment for a 30-day period ending June 4, 2012.
The AMF's final orders reflect the terms and conditions which the AMF has determined address the main public interest issues referred to in the AMF's Notice of Public Consultation dated October 7, 2011. These orders give the AMF's approval to Maple's acquisition of TMX Group, and indirectly Montreal Exchange Inc. and the Canadian Derivatives Clearing Corporation, and, subject to final approval, Maple's acquisition of Alpha Trading Systems Inc. and Alpha Trading Limited Partnership (collectively, “Alpha”). In addition, the AMF has published a notice for public comment with respect to its proposed recognition order relating to Maple's proposed acquisition of CDS. The AMF's notice invites public comment for a 30-day period ending June 4, 2012.
These draft and final orders are the result of extensive consultation by the OSC and AMF with Maple, TMX Group, CDS, market participants, and other regulators – including the Bank of Canada and the Competition Bureau. If these orders are finalized as published, Maple will accept them.
The OSC's proposed recognition order for Maple also confirms and clarifies the OSC's extensive ongoing regulatory oversight of equities trading and clearing and settlement activities, including provisions with respect to equities trading fees. These provisions include prohibitions, obligations and approval requirements that are designed to ensure that the Canadian capital market remains open and competitive for all participants, and that the interests of all participants in Canada's capital markets are respected. As well, the AMF's recognition orders confirm and clarify the AMF's extensive ongoing regulatory oversight of derivatives trading and clearing and settlement activities.
The draft and final orders provide important changes in areas such as: independent governance of Maple (as successor parent to TMX Group) as well as fair, meaningful and diverse representation on the Board of Maple; restrictions designed to ensure competitive equities markets; independent governance of CDS; and access to and fees for CDS clearing and depository services. Maple believes the binding commitments to the structure of the transaction and the regulatory landscape, as reflected in the orders, represent substantial changes to the initial proposal in respect of which the Competition Bureau expressed serious concerns.
Maple understands that each of the Alberta Securities Commission (“ASC”) and British Columbia Securities Commission (“BCSC”) also intends to publish notices with respect to the Maple transaction.
Speaking on behalf of Maple, Luc Bertrand said, “The recognition orders set out a clear and binding framework that will ensure we maintain open and vibrant exchanges with strong governance, fair and reasonable clearing and depository fees and strong ongoing regulatory oversight. The publication of these orders marks the culmination of an extensive and detailed review process. We look forward to finalizing these matters and implementing our vision for an integrated and more globally competitive exchange in Canada.”
Tom Kloet, Chief Executive Officer, TMX Group said, “After much work and a stringent regulatory review process, we believe that the orders published today set out a balanced framework that ensures strong regulatory oversight and accountability following the Maple transaction. We look forward to making an even broader contribution to the growth and success of Canada's capital markets through new capabilities, enhanced offerings and increased efficiency.”
Strong Governance, Open Access and Fair and Reasonable Pricing for CDS
As detailed in the recognition orders, Maple has committed to maintain strong governance, open access for all market participants, fair and reasonable pricing, and strong regulatory oversight for CDS.
With respect to CDS fees, pursuant to the Maple proposal, the following fee model will be implemented for core CDS clearing, settlement and depository services:
- CDS will maintain the 29 percent fee reduction announced by CDS for 2012 and will not seek approval for an increase in those fees unless there is a significant change in current circumstances;
- Starting November 1, 2012 CDS will share any annual revenue increases on clearing and other core CDS services, as compared to revenues in fiscal year 2012, on a 50/50 basis with participants; and
- CDS will also rebate an additional amount to participants in respect of on-exchange clearing services each year, starting at $2.75 million in 2013 and growing to $4 million annually by 2016.
Under the draft OSC order for CDS and as indicated in the AMF notice, both the OSC and the AMF must also approve fees for any new CDS services and changes to fees for any existing services. Accordingly, both the OSC and AMF orders for CDS will ensure that CDS fees will remain fair and reasonable in the context of the Canadian capital markets and trends relating to comparable services offered by clearing houses worldwide.
Additional Information About the Recognition Orders and Maple's Commitments
Maple's proposed pricing model for clearing and depository services and other Maple commitments referenced in this press release are outlined in a briefing document that will be available at www.abetterexchange.com and www.tmx.com. The draft OSC and final AMF recognition orders, and the AMF's and OSC's notices and request for comments, are available on the respective OSC and AMF websites.
As disclosed on April 27, 2012, Competition Bureau staff have provided an update to Maple and TMX Group regarding the status of the Competition Bureau's review of the Maple transaction. Staff advised Maple and TMX Group that, while the Competition Bureau has an independent mandate and will complete its own review, it has provided views and input to the OSC for its consideration relating to the potential impact of the Maple transaction on competition. In that context, Competition Bureau staff advised that it is possible that measures contained in the draft OSC recognition orders, if finalized and enforced, may materially change the regulatory environment such that the Competition Bureau's previously articulated serious concerns may be substantially mitigated. Staff of the Competition Bureau have emphasized that the Bureau would consider both the published draft orders and any finalized orders, and that a final decision would not be made until it had completed its process.
As previously disclosed, under the support agreement with TMX Group, Maple has agreed to use commercially reasonable efforts to obtain all required regulatory approvals, including from the securities regulatory authorities and the Commissioner of Competition, and to accept all conditions, commitments and undertakings necessary to do so, provided they do not result in a "Material Detriment" as defined in the support agreement. Although the draft and final recognition orders published by the OSC and the AMF are in a form that Maple will accept, it is possible that the OSC final orders may differ from the draft orders. In addition, Maple will continue to work to settle the terms and conditions of the additional required recognition orders, including the recognition orders required from the OSC to reflect the acquisition by Maple of Alpha and any exemptions from recognition that the AMF may require in respect of Maple as a result of that acquisition, the recognition order required from the AMF in respect of CDS and applicable recognition orders required from the ASC and BCSC, and to resolve outstanding issues and concerns raised by securities regulators and the Commissioner of Competition. However, there can be no assurance that the terms and conditions of such final recognition orders will not result in a Material Detriment or that remedies short of a Material Detriment will address the issues and concerns raised by securities regulators and the Commissioner of Competition. As a result, there can be no assurance that the required regulatory approvals will be obtained.
On April 30, 2012, Maple and TMX Group announced agreements for the acquisition by Maple of CDS and Alpha. These agreements include commitments from sufficient numbers of beneficial holders of securities of CDS, and outstanding equity interests in Alpha, to allow Maple to complete the proposed acquisitions of CDS and Alpha concurrently with or as soon as practicable following the completion of the Maple offer for TMX Group shares, subject to the satisfaction of customary terms and conditions, including the receipt of all necessary regulatory approvals, and, in the case of CDS, to CDS board approval of the amalgamation agreement and subsequent ratification of the CDS amalgamation agreement at a CDS shareholders' meeting.
As also announced on April 30, 2012, Maple's offer to acquire a minimum of 70% and a maximum of 80% of the shares of TMX Group for $50 in cash per share has been extended to 5:00p.m. (Eastern Time) on Thursday, May 31, 2012. Maple expects to have further information about the timing for receipt of potential final regulatory approvals by May 31, 2012, at which time it expects to further extend its offer to the date on which it expects to take up shares of TMX Group under the offer. Maple has agreed under its support agreement with TMX Group to continue to extend the expiry date of the offer until July 31, 2012 if necessary to obtain the required regulatory approvals. The offer is part of an integrated acquisition transaction, valued at approximately $3.8 billion, to acquire 100% of TMX Group shares. The TMX Group Board of Directors continues to unanimously recommend that TMX Group shareholders accept and tender their shares under the Maple offer.
Details of Maple's offer are available in its Offer and Circular dated June 10, 2011, as varied by the Notice of Variation dated June 24, 2011, the Notice of Change and Extension dated August 8, 2011, the Notice of Extension dated September 29, 2011, the Notice of Variation and Extension dated October 31, 2011, the Notice of Extension dated January 31, 2012, the Notice of Extension dated February 24, 2012, the Notice of Extension dated March 30, 2012, and a further Notice of Change and Extension to be filed by Maple on SEDAR and mailed to TMX Group's shareholders in respect of the extension of the offer announced April 30, 2012, and the developments announced today. These documents are, or in the case of the further extension of the offer announced April 30, 2012 will be, also available at www.abetterexchange.com.
About Maple Group Acquisition Corporation
The investors in Maple Group Acquisition Corporation are: Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), GMP Capital Inc., National Bank Financial & Co. Inc., Ontario Teachers' Pension Plan, Scotia Capital Inc., TD Securities Inc. and The Manufacturers Life Insurance Company.
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, TMX Select, Montreal Exchange, Canadian Derivatives Clearing Corporation, Natural Gas Exchange, Boston Options Exchange (BOX), Shorcan, Shorcan Energy Brokers, 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 (New York, Houston, Boston and Chicago) as well as in London and Beijing. For more information about TMX Group, visit our website at www.tmx.com.
This press release is not intended to and does not constitute or form part of an offer or invitation to sell or purchase any securities, the solicitation of an offer to buy or sell any securities or an offer to exchange or otherwise acquire any securities, in any jurisdiction, whether pursuant to the offer described in this press release or otherwise. Maple's Circular and related notices contain important information and TMX Group shareholders are urged to read them carefully before any decision is made with respect to the offer.
The distribution of this press release in jurisdictions other than Canada may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than Canada should inform themselves about, and observe, any applicable requirements. This press release does not purport to comply with the laws of any non- Canadian jurisdiction and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside Canada.
Information for U.S. Shareholders
The offer is being made for the securities of a Canadian company that does not have securities registered under Section 12 of the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”). Accordingly, the offer is not subject to Section 14(d) of the U.S. Exchange Act, or Regulation 14D promulgated by the U.S. Securities and Exchange Commission (the “SEC”) thereunder. The offer is being conducted in accordance with Section 14(e) of the U.S. Exchange Act and Regulation 14E promulgated by the SEC thereunder (with settlement being subject to a longer period than would typically apply for securities of U.S. public companies).
The Maple shares to be issued to shareholders (including U.S. shareholders) other than Maple pursuant to the plan of arrangement have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or under the securities law of any state or other jurisdiction of the United States. The Maple shares to be issued pursuant to the plan of arrangement will be issued in reliance upon the exemption from the registration requirements of the U.S. Securities Act provided by section 3(a)(10) thereof and only to the extent that corresponding exemptions from the registration or qualification requirements of state “blue sky” securities laws are available.
All dollar references in this press release are in Canadian dollars. On May 2, 2012, the Bank of Canada noon rate of exchange for U.S. dollars was CDN. $1.00 - U.S. $1.0110.
Notice to Shareholders in the United Kingdom and European Economic Area
The offer is only being made within the European Economic Area (“EEA”) pursuant to an exemption under Directive 2003/71/EC (together with any applicable adopting or amending measures in any relevant member state (as defined below), the “Prospectus Directive”), as implemented in each member state of the EEA (each, a “relevant member state”), from the requirement to publish a prospectus that has been approved by the competent authority in that relevant member state and published in accordance with the Prospectus Directive as implemented in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive. Accordingly, in the EEA, the offer and documents or other materials in relation to Maple Shares are only addressed to, and are only directed at, (a) qualified investors in a relevant member state within the meaning of Article 2(1)(e) of the Prospectus Directive, as adopted in the relevant member state, and (b) persons who hold, and will tender, the equivalent of at least €50,000 worth of TMX Shares (collectively, “permitted participants”). These documents may not be acted or relied upon by persons in the EEA who are not permitted participants.
With reference to the U.K. Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), the offer and any materials in relation to Maple Shares is only directed at persons in the United Kingdom that are (a) investment professionals falling within Article 19(5) of the Order or who fall within Article 49(2)(a) to (d) of the Order; (b) holders of TMX Shares at the time of communication of the offer and such materials; or (c) persons to whom they may otherwise lawfully be communicated (collectively, “relevant persons”). In the United Kingdom, Maple Shares are only available to, and the offer may only be accepted by, relevant persons who are also permitted participants, and as such, any investment or investment activity to which this document relates is available only to, and may be relied upon only by, relevant persons who are also permitted participants.
Caution Regarding Forward-Looking Information
This document contains “forward-looking information” (as defined in applicable Canadian securities legislation). This information is based on the current expectations, assumptions, projections, estimates and other factors that the management of Maple believe to be relevant as of the date of this document. This information is naturally subject to uncertainty and changes in circumstances. The forward-looking information contained in this document includes, but is not limited to, statements relating to the proposed acquisition of TMX Group by Maple, and the effects thereof, and the proposed subsequent combination with Alpha Group and CDS, and the effects thereof, and other statements other than historical facts. TMX Group has not had access to confidential information relating to Alpha Group, including the terms of the Alpha shareholder agreement. To the extent the information in this document relates to Alpha Group, TMX Group is relying on Maple for the accuracy of that information. This document provides a summary of, and is entirely qualified by, the draft and final recognition orders of the OSC and AMF (available on the OSC and AMF websites, respectively) and the more detailed information that is set out in the notice of extension of Maple to be dated May 3, 2012 and mailed to TMX Group shareholders (that will be filed on SEDAR at www.sedar.com and on Maple' website at www.abetterexchange.com).
Often, but not always, forward-looking statements and forward-looking information can be identified by the use of the words “expect”, “will”, “intend”, “estimate”, “may” and similar expressions. Forward-looking statements are necessarily based upon a number of factors, estimates and assumptions that, while considered reasonable by Maple, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that such forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Maple and/or its subsidiaries to be materially different from the estimated future results, performance or achievements expressed or implied by those forward looking statements and information, and the forward-looking statements and information are not guarantees of future performance. In addition to the risks identified in the press release, these risks, uncertainties and other factors include, but are not limited to: the satisfaction of the conditions to the proposed acquisition of TMX Group, including obtaining required regulatory approvals; failure to acquire Alpha Group or CDS; the inability to successfully integrate TMX Group's operations with those of Alpha Group and CDS, including, without limitation, incurring and/or experiencing unanticipated costs and/or delays or difficulties; costs of on-exchange clearing and depository services, trading volumes (which could be higher or lower than estimated) and revenues; future levels of revenues being lower than expected or costs being higher than expected; conditions affecting the industry; local and global political and economic conditions; unforeseen fluctuations in trading volumes; competition from other exchanges or marketplaces, including alternative trading systems and new technologies, on a national and international basis; foreign exchange rate fluctuations and interest rate fluctuations (including from any potential credit rating decline); legal or regulatory developments and changes; the outcome of any litigation; the impact of any acquisitions or similar transactions; dependence on the economy of Canada; competitive products and pricing pressures; success of business and operating initiatives; failure to retain and attract qualified personnel; failure to implement strategies; dependence on information technology; dependence on adequate numbers of customers; risks associated with clearing operations; inability to protect intellectual property; the adverse effect of a systemic market event on the derivatives business; risks associated with integrating the operations, systems, and personnel of new acquisitions; dependence on market activity that cannot be controlled and/or conditions in the securities market that are less favourable than expected; and changes in the level of capital investment. Other factors could also cause actual results to differ materially from those in the forward-looking information. For additional information on such risks, please consult “Risk Factors” found on page 64 of Maple's June 10, 2011 circular, and page 2 of Maple's January 31, 2012 Notice of Extension.
Actual results, events, performances, achievements and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking information contained in this document. Maple and its investors make no representations as to present or future value or the present or future trading price of any security, including Maple shares.
Given these risks and uncertainties, investors should not place undue reliance on forward-looking information as a prediction of actual results. Neither Maple nor its investors nor any of their respective affiliated companies undertakes any obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except to the extent legally required.
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For further information:
TMX Group shareholders:
Kingsdale Shareholder Services Inc. Toll-free 1-888-518-1556 (English and Français) within North America, or outside North America at 416-867-2272 (collect calls accepted) or by e-mail at firstname.lastname@example.org
Maple Media Contacts:
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TMX Group Media Contact:
Director, Corporate Communications
TMX Group Investor Contact:
Director, Investor Relations