THE LONDON Stock Exchange (LSE) might want to pretend it is business as usual, after a rival consortium bested its offer for the Toronto Metals Exchange (TMX).
But the truth is the bid from the Canadian banks and pension funds that make up the Maple group changes everything.
There is a chance that TMX shareholders will still stick with the LSE offer, especially if they think the £100m of revenue synergies can be achieved. If they share our concerns that the target is too optimistic, they are likely to plump for Maple.
If the LSE really believes it can achieve £100m of synergies, then it could outbid Maple and still create shareholder value. Such a bid would no longer be a merger of equals, however, and so could hit regulatory hurdles.
Although there is some strategic sense to an LSE/TMX merger – it will create the number one exchange for mining listings – Rolet’s bid for his Canadian rival was always a variation on the classic “fat man defence”.
He knew that the LSE needed to beef up to deter prospective buyers in the flurry of stock exchange M&A deals.
Before the TMX deal, the LSE was vulnerable as a takeover target. If Rolet fails to bring home the Canadian bacon, it will become a target once again.
That mightn’t be so bad for shareholders, especially if the buyer offers a tidy premium.