The Ontario government is raising questions about whether a deal to merge the Toronto and London stock exchanges is a “merger of equals.”
The deal, announced yesterday, would merge the London Stock Exchange Group plc (LSE-LSE) and TMX Group Inc. (TSX-X) into a transatlantic group, jointly headquartered in London and Toronto.
A joint press release from the two exchanges promotes the deal as creating the largest stock exchange worldwide, measured by number of listings, and the top global listings venue for natural resources, mining, energy and clean technology.
According to media reports, however, Ontario Finance Minister Dwight Duncan yesterday questioned if the $7 billion merger is a good idea. He recalled the range of problems that plagued global-scale banks during the recent financial crisis and advised wariness of the notion that bigger is better.
The federal government has final authority for approving the merger, however, both Ontario and Quebec’s security regulators must approve any deal that offers control of more than 10% of TMX Group. Both province’s securities regulators are planning hearings on the matter.
At press time, TMX Group stock was up more than 4% since Tuesday’s close.