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The London Stock Exchange and Canada's TMX Group are joining forces to form the world's largest exchange by listings, and the fourth largest in terms of revenues.
The all-share merger, announced on Wednesday, will create a bourse with a total of 6,700 companies, and an aggregate market capitalisation of £3.7 trillion, and is being unanimously recommended by both boards. The joint firm will also be the largest international listing venue from growth markets, as well as the biggest in natural resources mining and energy, the LSE's CEO, Mr Xavier Rolet, who will head the joint group, said .
“We will be critically positioned to capture a broader set of opportunities,” he said. The company would use the London Stock Exchange's growing appeal as a centre for international listings to attract more global issuers, including from growth markets, he said.
It would give those planning to list access to a deeper base of capital, and market participants a wider variety of investment alternatives and products, he said. The company is targeting £35 million by the third year, and cost synergies totally 8 per cent of current expenses by the end of year two.
Headquarters
The company will maintain headquarters in both London and Toronto, with TMX's Mr Wayne Fox taking over as Chairman, and the TMX's Chief Executive, Mr Thomas Kloet, becoming the Toronto-based president of the group.
LSE will own 55 per cent of the merged group. Mr Xavier Rolet, a Frenchman, took over running the LSE from Ms Clara Furse two years ago to high hopes that he would help the LSE tackle the increasingly highly competitive world of exchanges. The exchange had faced criticism that it had been slow off the mark in reacting to the lower-cost, high-speed alternative trading platforms, and has confronted a number of takeover attempts, including by NASDAQ.
However, observers remain cautious about the move, with Citigroup analysts labelling it as “defensive” rather than a growth deal.
“We see this putting the LSE's existing growth strategies on the backburner, which we view as a negative.”
Over the past few years, the LSE has become a popular venue for Indian firms seeking an international listing. Last year, India was the biggest foreign issuer on the London main market and the smaller AIM exchange.
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