TMX-LSE merger gets cold shoulders from Ontario, Quebec and Ottawa

The heat of excitement that greeted the merger of the Toronto and London stock exchanges has met with a stiff, cold winter headwind as various levels of government have stood up to express their “concerns” in different ways.  First, Ontario’s Finance Minister Dwight Duncan said he was worried about the fact that the largest shareholder in the deal would be the ruler of Dubai. Then, Duncan’s Quebec counterpart Raymond Bachand said the deal would have to be examined to make sure it preserved Montreal’s jobs and access to capital. Finally, Tony Clement got on the bandwagon and announced that the TMX-LSE merger will be reviewed by Industry Canada.

According to the Globe and Mail:

Federal Industry Minister Tony Clement confirmed Monday he will review the deal to decide whether it’s a “net benefit” for Canada. The scrutiny period could take up to 75 days: 45 days is the normal length of review but Ottawa can extend this by another 30 days…

The Ontario Securities Commission and Quebec’s Autorité des marchés financiers are preparing to shortly hold public hearings on the merger – proceedings both governments in Toronto and Quebec City will watch carefully to gauge voter reaction to the deal.

As the Globe notes, nothing is spared from Ontario’s election-year politics, as Tim Hudak is also making noises about caution and how “questions need to be answered.” Queen’s Park can, if things get too hot, pull the plug for basically any reason whatsoever if the polls look bad. It seems kind of bizarre that a billion-dollar merger is at the mercy of a provincial election (the McGuinty government has not been particularly hostile to global business before this) but hey, that’s politics in Ontario circa now.

Despite all that, Reuters suggests the deal is still likely to go through if the two stock exchanges give Quebec City and Queen’s Park job guarantees. Of course, Ottawa has used job guarantees to approve mergers before and got burned by US Steel, so hopefully they get better fine print this time around.

• Ontario emerges as main obstacle to TMX-LSE union [Globe and Mail]
• Hudak shares Liberal doubts about value of TMX-LSE merger for Ontario [Globe and Mail]
• Quebec says TMX-LSE hearings will be months away [Reuters]
• Analysis: LSE-TMX deal likely to survive approval process [Reuters]