London Stock Exchange is in talks to buy Canadian exchange TMX for $3.2bn

9th February 2011

The London Stock Exchange is in talks to buy Canadian exchange TMX in an all share deal for $3.2bn.

The full financials on the deal are reported here on Bloomberg.

FT Alphaville deems the deal to be a defensive one.

It is certainly true that the LSE has had a history of having to fight off takeovers from Deutsche Börse and the Nasdaq in recent years.

FT Alphaville sees cost savings as key. It is more cynical about the revenue synergies suggested by the two firms and says it doesn't think the market has factored those in to this morning's rise of around 8 per cent in the LSE's share price.

It notes that the deal should pass regulatory hurdles in Canada because TMX retains its headquarters there and has a duel listing with London.

The LSE has transatlantic ambitions but FT suggests here that rather than a big play into derivatives dominated by US players, the deal may be most significant for TMX's big presence in mining and commodities areas that are, of course, booming.

The Telegraph's head of business Damien Reece says that attack is the best form of defence.

He writes that all the big traditional exchanges are under pressure noting that the LSE was trading 63.8 per cent of UK equities at the end of 2010 compared with 75 per cent in 2009.

Toronto had 64pc of its home market compared to 95pc in 2008.

Perhaps this is match made in the face of stiff competition from new entrants rather than a match made in heaven.

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