TMX and Maple hook up

The chase by Marty Cej:

After a five-month courtship that involved the scuttling of proposed marriage with another, the board of TMX Group has agreed to Maple Group’s $3.8-billion takeover offer and will recommend the deal to TMX shareholders. Maple, the consortium made up of 13 members including Manulife, TD, CIBC, and pension plans Caisse de Depot and Aimco, will buy 70- to 80 percent of TMX with cash and the rest in stock. Maple Group is also seeking to buy TMX competitor Alpha Group as part of the deal, as well as the clearing house CDS Inc.


Critics say the deal will mean a monopoly on Canadian stock trading and higher fees while supporters point out that the banks do the bulk of trading on the exchange and are unlikely to raise fees on themselves. It could be a thorny issue for regulators to decide and a tough sell for Maple Group’s public relations team once the word “monopoly” starts popping up in headlines. Are there any other possible bidders out there? Does a broad Canadian ownership with deep pockets put the TMX in an acquisitive position? There has been $30 billion in exchange deals since October of last year, according to Bloomberg data, so why stop now?

Tom Kloet, TMX CEO and prospective CEO for Maple Group in the event of a successful takeover, and Luc Bertrand, former head of the Montreal Exchange and spokesperson for Maple Group, will sit down with us at 12:30.

Canadian Pacific Railway is poised to rally this morning after Pershing Square Capital – the hedge fund of activist shareholder Bill Ackman – disclosed late Friday that it has acquired a 12.2-percent stake in CP, making Pershing the railway’s biggest shareholder. CP stock rallied in the last minutes of Friday trading but a raised price target at RBC – to $80 from $66 – may help things along this morning.

The Globe and Mail says Ackman may get “active” with CP management as soon as this week in a bid to correct the stock’s underperformance relative to CNR as soon as possible. CP’s senior executives met with the company’s financial and legal advisers over the weekend, the Globe reports, to “review options.” The most likely option is to sit and listen to Ackman’s ideas.
It is a big week for central banks with a two-day Fed meeting kicking off Tuesday and Mario Draghi’s first meeting as the new European Central Bank president Thursday.

For Draghi, it will be a battlefield commission as he takes over in the midst of a struggle to bail out the weakest members of the euro-zone, prevent the collapse of the region’s banks and establish a permanent bailout mechanism that will prevent this sort of thing from happening again. Not to mention the vampire issue in Transylvania or the werewolf cull in the Carpathians that continues to be thwarted by PETA. The Fed’s statement will come out at 12:30 pm Eastern Wednesday followed by a Q&A with Ben Bernanke.

The discussion is likely to revolve around jobs and housing and just how unconventional unconventional can get. For the ECB, it could mean a rate cut as Draghi puts his stamp on the job.
Both central banks will also be explicit in their recognition of the European debt crisis as the biggest threat to the global economic recovery. Expect both the ECB and the Fed to lob the problem back to governments ahead of the G20 leaders’ summit this weekend. Monetary policy is doing what it can, they’ll say, so how about a little help on the fiscal policy side?

Today is the last trading day of October in what has proven to be a remarkably bullish month for stocks. We’ll need to slice and dice the market’s performance into leaders and laggards and wax prophetic over what may happen next. Earnings continue to top expectations, money is flowing back into commodities and European leaders are slouching towards a solution in a blue velour pantsuit… will the final quarter of 2011 prove to be the strongest quarter of the year for Canadian stocks?

The best performer for October? Yellow Media. The worst? Agnico-Eagle.

We are also tackling Canadian GDP for August, which rose 0.3 percent, topping the 0.2 percent expected by economists.