Nine leading Canadian financial institutions and pension funds submit proposal to acquire TMX Group in transaction valued at approximately $3.6 billion

May 15, 2011 · 9 min read

Vision to create a stronger integrated exchange and clearing group
Cash and share offer of $48 per share
Superior proposal offers significant premium
Sponsorship from Canada's largest capital markets participants
Preserves current governance structure and regulatory oversight
Investor Conference Call Scheduled for 10 am ET Monday, May 16, 2011

TORONTO - Maple Group Acquisition Corporation ("Maple"), a corporation formed by five of the country's largest pension funds and four Canadian bank-owned investment dealers, today announced that it has submitted a proposal to the Board of Directors of TMX Group Inc. ("TMX Group") (TSX: X) to acquire all of its issued and outstanding shares in a transaction valued at approximately $3.6 billion.

Maple's investors include: Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), National Bank Financial Inc., Ontario Teachers' Pension Plan Board, Scotia Capital Inc. and TD Securities Inc. Upon completion of the transaction, existing shareholders of TMX Group would own approximately 40% of Maple's outstanding shares, the pension fund investors would own approximately 35% and the bank-owned investment dealers would own approximately 25%. No shareholder of Maple would own more than 10% of Maple's total shares outstanding, consistent with the existing regulatory framework.

Speaking on behalf of Maple's investors, Luc Bertrand, Vice-Chairman of National Bank Financial Group, said: "As like-minded investors, we believe there is an opportunity to create significant value by capitalizing on TMX's strengths to build a stronger integrated exchange and clearing group - and by doing so, to secure the future growth and ongoing integrity of the Canadian capital markets. We believe our offer constitutes a superior proposal under which shareholders would receive cash, plus the opportunity to continue to participate in the company's ongoing growth. We welcome the opportunity to work with TMX's board and management to capture the benefits of our proposal for the company and all of its stakeholders."

Maple believes its proposal will enable TMX Group to achieve the scale and efficiency it needs to be successful in an increasingly competitive marketplace, while continuing to develop its unique capacity for serving global resource companies, as well as Canada's vibrant venture, energy and derivatives markets. The Maple transaction will preserve Canadian governance, decision-making and regulatory oversight, and will position the company to pursue strategic opportunities internationally.

A Superior Proposal

Under the terms of its proposal, Maple would acquire all of the issued and outstanding common shares of TMX Group for, at the election of each shareholder, $48 in cash per TMX share or one common share of Maple per TMX share, in each case subject to pro ration. The maximum aggregate amount of cash payable is $2.5 billion and the maximum number of Maple shares issuable is 22.5 million.

On a fully prorated basis, each TMX Group share would be exchanged for $33.52 in cash plus 0.3016 of a Maple share. The transaction represents a 24% premium to the implied value of the LSE offer based on the closing price and the Bank of Canada noon exchange rate on May 12, 2011, and a 20% premium to the volume weighted average price of the TMX Group's shares for the preceding 20 trading days.

Maple intends to preserve TMX Group's current corporate governance structure. At least half of the directors will be independent, at least 25% of the directors will be residents of Quebec, at least 25% will have expertise in or be associated with the Canadian public venture market and there will be fair and meaningful representation of directors with expertise in derivatives.

Maple intends to maintain TMX Group's current management and staffing levels, and will fulfil the TMX Group's 2008 undertakings to the Autorité des marchés financiers including a commitment to keep its derivatives trading and clearing business in Montreal. In addition, Maple commits to invest in the continued growth of TMX Group's derivatives trading and clearing business. Moreover, the integrated exchange model provides a stronger institution to meet Canada's obligation to facilitate the clearing of OTC derivatives.

Maple's proposed business model is aimed at building on TMX Group's position as the marketplace where a majority of global mining, oil & gas, and public venture companies list and trade. Maple believes this will make TMX Group more competitive and ensure that the market as a whole, and market participants individually, benefit from the transaction. The Maple transaction has the support of many of Canada's largest capital market participants, including pension fund investors managing over $450 billion in assets. Maple's investors also include investment dealers owned by four of the six largest Canadian banks which, in the aggregate, are significant customers of TMX Group, representing 39% of the total volume and 41% of the total value traded on the TSX during the month of April 2011.

Combination with Alpha Group and CDS

A compelling part of Maple's proposal is the proposed combination of TMX Group with Alpha Group and CDS to create an integrated trading and clearing exchange for equities, bonds, energy products and derivatives in both exchange-traded and over-the-counter (OTC) markets. This proven and highly-valued business model, which currently exists at Deutsche Börse, Hong Kong Exchanges and Clearing and the Australian Securities Exchange, would dramatically broaden TMX Group's business activities, generate substantial growth opportunities, and create significant synergies (including cost rationalization) all for the benefit of TMX Group, its shareholders and Canada's standing as a global financial centre of excellence.

Certain Maple investors have a significant equity ownership interest in each of Alpha Group and CDS and have agreed to use commercially reasonable efforts to complete transactions pursuant to which Alpha Group and CDS will be combined with TMX Group. Maple intends to pursue the combination of TMX Group with Alpha Group and CDS as soon as possible following the completion of the acquisition of TMX Group. Although Maple's proposal to acquire TMX Group is not conditional on the concurrent combination with Alpha Group and CDS, Maple intends to seek the required regulatory approvals, including Competition Act and securities regulatory approvals from the Autorité des marches financiers and the Alberta, British Columbia and Ontario Securities Commissions, for such combinations, and the acquisition of TMX Group by Maple will be conditional on receipt of such regulatory approvals.

Accretive Transaction

The cash portion of Maple's proposal will be funded through debt and equity commitments, such that outstanding debt would represent approximately 2.9x trailing twelve months cash EBITDA. With the benefit of the proposed capital structure, Maple believes the transaction will be significantly accretive to the TMX Group's earnings per share. Even without the significant benefits of the proposed follow-on combination with Alpha and CDS, the Maple transaction is expected to be approximately $0.50 accretive to the TMX Group's analyst consensus 2012 EPS estimate of $3.48. Maple plans to maintain TMX Group's current annual dividend of $1.60 per share ($0.40 paid quarterly).

Conditions

In addition to the regulatory approvals described above, the acquisition of TMX Group will be subject to customary conditions, including approval by a minimum of 66 2/3% of TMX Group shareholders. Neither the acquisition of TMX Group, nor the subsequent combination of Alpha or CDS, requires approval under the Investment Canada Act.

Advisors

Maple is being advised by CIBC World Markets Inc., National Bank Financial Markets, Scotia Capital Inc. and TD Securities Inc.

About Maple Group Acquisition Corporation

Maple Group Acquisition Corporation was formed by Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Fonds de solidarité des travailleurs du Québec, National Bank Financial Inc., Ontario Teachers' Pension Plan Board, Scotia Capital Inc. and TD Securities Inc.

Investment Community Conference Call Details

Maple will host a conference call for the investment community at 10:00 am ET on Monday, May 16, 2011. Media is welcome to join the call in listen-only mode. To participate in the conference call, North America callers should dial (888) 231-8191; international callers should dial (647) 427-7450. A replay of the teleconference will be available approximately two hours following the conclusion of the call. To access the replay, callers should dial (800) 642-1687 and enter passcode: 67762724. A copy of Maple's investor presentation will be available for download prior to the call at www.abetterexchange.com.

Media Conference Call Details

Maple will host a conference call for media at 11:15 am ET on Monday, May 16, 2011. To participate in the conference call, North America callers should dial (888) 231-8191; international callers should dial (647) 427-7450. A replay of the teleconference will be available approximately two hours following the conclusion of the call. To access the replay, callers should dial (800) 642-1687 and enter passcode: 67894790.

This press release is not intended to and does not constitute or form part of an offer or invitation to purchase, or the solicitation of an offer to sell, common shares of Maple or an offer to exchange or otherwise acquire common shares of Maple in any jurisdiction.

Information for U.S. Shareholders

The common shares of Maple have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States. The common shares of Maple may not be offered, sold or delivered, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

Caution Regarding Forward-Looking Information

This document contains "forward-looking information" (as defined in applicable Canadian securities legislation). This information is based on the current expectations, assumptions, projections, estimates and other factors that the management of Maple and its founding shareholders believe to be relevant as of the date of this document. This information is naturally subject to uncertainty and changes in circumstances. The forward-looking information contained in this document includes, but is not limited to, statements relating to the expected effects of the proposed acquisition of TMX Group by Maple, the proposed subsequent combination with Alpha Group and CDS, and/or the combined group, such as information related to the anticipated effect on financial performance, growth opportunities, expected dividend policy, anticipated synergies, business strategies and the development of new products and services and other statements other than historical facts.

Often, but not always, such forward-looking information can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "scheduled", "targeted", "estimates", "intends", "anticipates", "believes", or variations or the negatives of such words and phrases or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved or not be taken, occur or be achieved. Although Maple and its founding shareholders believe that the expectations, assumptions, projections and estimates reflected in such forward-looking information are reasonable, Maple and its founding shareholders can give no assurance that such expectations, assumptions, projections and estimates will prove to be correct. Forward-looking information, by its nature, requires that assumptions be made and is subject to significant risks and uncertainties which may give rise to the possibility that expectations or conclusions will not prove to be accurate and that such assumptions may not be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward looking information. These factors include: the satisfaction of the conditions to the proposed acquisition of TMX Group, including obtaining required regulatory approvals for the acquisitions of TMX Group, Alpha Group and CDS; future levels of revenues being lower than expected; conditions affecting the industry; local and global political and economic conditions; unforeseen fluctuations in trading volumes; competition from other exchanges or marketplaces, including alternative trading systems and new technologies, on a national and international basis; foreign exchange rate fluctuations and interest rate fluctuations (including those from any potential credit rating decline); legal or regulatory developments and changes; the outcome of any litigation; the impact of any acquisitions or similar transactions; dependence on the economy of Canada; competitive products and pricing pressures; success of business and operating initiatives; failure to retain and attract qualified personnel; failure to implement strategies; dependence on information technology; dependence on adequate numbers of customers; risks associated with clearing operations; inability to protect intellectual property; adverse effect of a systemic market event on the derivatives business; risks associated with integrating the operations, systems, and personnel of new acquisitions; dependence on market activity that cannot be controlled and/or conditions in the securities market are less favourable than expected and changes in the level of capital investment. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking information.

Actual results, events, performances, achievements and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking information contained in this document. Maple and its founding shareholders make no representations as to present or future value or the present or future trading price of any security, including Maple shares.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking information as a prediction of actual results. Neither Maple nor its founding shareholders nor any of their respective affiliated companies undertakes any obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except to the extent legally required.

EBITDA means earnings on a consolidated basis before interest, taxes, extraordinary, unusual or non-recurring items, depreciation and amortization, all determined in accordance IFRS for Q1 2011 and comparative period in 2010, and in accordance to Canadian GAAP for FY2010 but adjusted to include initial and additional listing fees billed and to exclude initial and additional listing fees reported as revenue.

Contact :

Deborah Allan
Director, Communications and Media Relations
Ontario Teachers' Pension Plan
(416) 730-5347
deborah_allan@otpp.com