LSE abandons Canadian merger plans

The London Stock Exchange has abandoned plans to merge with the owner of the Toronto Stock Exchange after concluding not enough of the Canadian group’s shareholders would back the deal.

The LSE said that based on proxy information received in Canada by TMX Group, the Toronto exchange owner, it would fall short of the two-thirds majority required despite overwhelming backing from its own shareholders.

The decision comes just a day before shareholders were due to vote on the merger and is a major blow to the ambitions of the London exchange and Xavier Rolet, the LSE’s chief executive.

He said in a statement, “We are clearly disappointed that, despite a majority of both LSEG and TMX Group shareholders voting for our recommended merger, the two-thirds approval threshold for TMX Group shareholders was not met and hence the merger will now not proceed.”

The LSE announced the tie-up with TMX in February as a merger of equals, but a number of financial groups in Canada objected to the fact that the LSE would own 55% of the shares and launched their own rival offer through a vehicle called Maple.

As a result of today’s scrapping of the deal, TMX will pay the LSE a break fee of 10 million Canadian dollars (£6.4m).