The federal and provincial governments with the power to block the London Stock Exchange Group plc. and TMX Group Inc. merger say they will review the $7 billion merger, a move that could delay the deal’s closing by months.
Ottawa officially confirmed yesterday it will filter the deal through the Investment Canada Act, which means the two companies need to prove the deal is of “net benefit” to Canada.
“This transaction is in fact subject to review under the Investment Canada Act,” Federal Industry Minister Tony Clement told reporters in a news conference yesterday.
He now has 45 days to review and render a decision, though Ottawa can take an extra 30 days if it decides it needs the time.
It will take even longer as far as Quebec is concerned. It’s securities regulator, which has a say thanks to the merger of the Toronto and Montreal stock exchanges back in 2008, says it will take up to three months.
“It won’t be before two or three months (from now) at least,” Sylvain Theberge, spokesman for the Autorite des marches financiers, told Reuters.
Ontario also has a big say in the deal, and since Canada’s most populous province is already in election mode, the deal might also get caught up in its politics.
Finance Minister Dwight Duncan is indicating the provincial government put pressure on the deal to make sure Ontario’s interests are protected.
“A process needs to exist for Ontarians to have a say and the Ontario Securities Commission will fulfil that need,” he says.
Provincial politics can make things miserable for such large deals, if the failed bid for the Potash Corp. of Saskatchewan is any indication.
Read more about the deal in this week’s InHouse news update.