London and Toronto announce stock exchange merger

The London and Toronto stock exchanges are to merge, creating one of the world’s largest stock markets that will dominate trade in mining and energy stocks, it was announced today (Wednesday February 09).

The London Stock Exchange and TMX Group, which operates the Toronto Stock Exchange, said they would combine in an all-share merger of equals, with joint headquarters in London and Toronto. The merger will create a world leading organisation and is unanimously being recommended by the Boards of both LSEG and TMX, they said in a joint announcement.
 
The move will mean that 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.

The aim is to create a more diversified business with greater scale, scope, reach and efficiencies, generating substantial benefits for all stakeholders and it will be the largest listings venue in the world by number of total listings with over 6,700 companies with an aggregate market capitalisation of approximately £3.7 trillion(C$5.8 trillion).

It will also be the top listings venue in the world for natural resources, mining, energy and clean technology companies, for international listings from emerging and growth markets and top for SMEs with approximately 3,600 combined AIM and TSX Venture Exchange listings providing deep expertise in supporting small cap and early stage companies.

‘We are today announcing the creation of a global leader in the exchange space. Building on our own shared long histories of excellence in capital markets, financial strength and cultures of internationally respected governance, I believe that together we will be able to offer shareholders and customers a business significantly greater than the sum of our parts. This merger comes at a hugely important time in the history of capital markets,’ said Chris Gibson-Smith, chairman of London Stock Exchange Group.

Two highly successful and profitable institutions are joining forces to create a more diversified and international company, according to Wayne Fox, chairman of TMX Group. ‘This merger of equals will benefit shareholders, issuers, customers, employees and other stakeholders of both organisations. As important, it will have a positive impact on the business communities in Canada, the UK and Italy. I look forward to working with my fellow directors and the combined team to create one of the world's leading exchange groups,’ he added.

The merger recognises the existing centres of excellence within the Merged Group and reinforces these strengths by assigning global responsibility across its geographic footprint, with global leadership in Toronto for primary markets, Montreal for derivatives and Calgary for energy.

London will continue as a key centre for international listings with global responsibility for technology solutions, information services and post-trade services. For its part, Milan will be the centre for fixed income and equities trading, and European post-trade. Montreal, Toronto, Milan and Colombo will remain centres of excellence in the development of technology for the Merged Group and for the expanding external technology services business.

‘This is an incredibly exciting merger with considerable growth opportunities. We are creating the world’s largest listings venue for the commodities, energy and natural resources sectors, as well as the premium market for small, mid-size and growth companies,’ said Xavier Rolet, chief executive officer of London Stock Exchange Group.

'This new international leader, marrying the right cost structure, financial strength, technological expertise and product portfolio, will be strongly positioned to capitalise on growth opportunities in emerging markets and deliver them to our customers in North America, Europe and beyond. Together, we will also be uniquely positioned to offer high performance, low cost technology solutions to our exchange clients around the world. We are aiming at nothing less than becoming a true powerhouse in the global exchange business,’ he added.

Completion of the merger is subject to customary regulatory and other approvals, including approval by LSEG and TMX shareholders and court approval in Ontario.  Each of LSEG's and TMX's markets will continue to be regulated in accordance with local requirements by their existing regulators. Provisions made to satisfy the requirements of the Investment Canada Act as well as Canadian provincial securities regulators will be made public.