Stock market in London and Toronto to merge

Stock market merger between London Stock Exchange and TMX Group will create one of the largest stock exchanges in the world.

Chris Young / AP / File
TMX Group, which operates the Toronto Stock Exchange, and the London Stock Exchange announced Wednesday, Feb. 9, 2011, they are merging to create a stock market that's one of the biggest in the world. The facade of the former Toronto Stock Exchange (TSX) building on Bay Street is shown in this March 23, 2009 photo.

LONDON (AP) — The London Stock Exchange Group PLC and TMX Group Inc., which operates the Toronto Stock Exchange, are merging to create one of the world's largest stock markets, the companies announced Wednesday.

The deal will be an all-share merger, with headquarters and listings in both the U.K. and Canada. LSE shareholders will hold 55 percent of the new company and TNX will have 45 percent.

Both exchanges are heavily weighted with mining stocks and a combination would create the world's biggest exchange for mining and energy stocks.

The companies did not estimate the size of the new group, but TMX Group is currently valued at $3 billion and the London group at around $3.25 billion.

LSE shares were up 7.6 percent at 960 pence as trading opened in London. TMX closed 1 percent higher at Canadian $40.28 on Tuesday.

LSE Chief Executive Xavier Rolet will be CEO of the new company, LSEG-TMX, while TMX CEO Thomas Kloet will become president.

"Canadian customers will benefit from access to one of the world's deepest capital pools while European issuers will have an effective gateway to North American financial markets," Kloet said.

Rolet said: "We are aiming at nothing less than becoming a true powerhouse in the global exchange business."

The combination will have the world's largest number of listing, more than 6,700 companies with an aggregate value of $5.8 trillion, the partners said. They expect to realize annual savings of 35 million pounds ($56 million) by the second year of the merger.

For the year ending Sept. 30, the London exchange reported revenues of $1.03 billion while TMX report $636 million.

The companies expect to seek shareholder approval in the second quarter, with completion in the second half subject to regulatory clearance.

LSE Group also owns Borsa Italiana in Milan, while TMX also operates the Montreal Exchange, the Natural Gas Exchange (NGX) in Calgary, the Boston Options Exchange and the TSX Venture Exchange in Calgary and Vancouver.

The LSE's move into Italy was part of a wave of exchange mergers and acquisitions.

In October, the Singapore Exchange Ltd. said it would buy Australian counterpart ASX Ltd. for $8.3 billion in a merger of Asia's second-and third-largest trading operators.

In 2007, NYSE acquired Euronext, operator of the Paris, Amsterdam, Lisbon and Brussels exchanges. NYSE Euronext formed not only the first trans-Atlantic financial market, but the world's largest at the time.

The same year Nasdaq Stock Market Inc., which lost its first battle to cross the Atlantic with a failed bid for the London Stock Exchange, bought Nordic exchange operator OMX AB.


Rob Gillies in Toronto contributed to this report.

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