Australia decision a new hurdle for TMX-LSE deal

* ASX/SGX deal seen vetoed on national interest grounds

* Analyst says deal, report delay could be election issue

* Ontario lawmaker says Australia doing right thing

By Solarina Ho

TORONTO, April 5 (Reuters) – Australia’s veto of a foreign
bid for its main stock exchange will make it easier for
Canadian regulators to block London’s offer for stock exchange
operator TMX Group (X.TO: Quote, Profile, Research) as a looming federal election further
politicizes the controversial deal.

But there will be no decision for months on the Canadian
proposal, given that TMX and the London Stock Exchange (LSE.L: Quote, Profile, Research)
have yet to submit documentation surrounding the LSE’s $3
billion offer and the government then has 45 to 75 days to
review the papers, with allowances for further extensions.

“I think it certainly increases the risk that it would be
turned down,” John Gravelle, a national mining leader at
PricewaterhouseCoopers, said of Australia’s likely rejection of
Singapore Exchange Ltd’s (SGXL.SI: Quote, Profile, Research) $7.8 billion bid for ASX Ltd
(ASX.AX: Quote, Profile, Research) on national interest grounds. [ID:nL3E7F50PP]

“Now there is a precedent out there for countries rejecting
this under their equivalent of the Investment Canada Act.”

The Investment Canada Act says government officials must
examine whether a foreign bid for a domestic company is of net
benefit to Canada, although exactly what that means is open to

Provincial regulators, including those from Canada’s
business center of Ontario, must also approve the deal.

Canada dented its open-for-business reputation when the
federal government vetoed last year’s offer for fertilizer
giant Potash Corp on the grounds there was no net benefit.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ANALYSIS-Regulators kingmakers in NYSE fight [ID:nN04281862] BREAKING VIEWS-Exchange nationalism foolish [ID:nLDE72M0R8] Graphic-Exchanges compared Take-a-look on exchange mergers [ID:nLDE7301C4] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Australia and Canada are both resource focused Commonwealth
countries, and both country’s exchanges carry a large
percentage of the world’s mining companies.

Those similarities could resonate in Canada should the
Australian exchange deal be scuppered as expected.

An Ontario all-party legislative committee had been set to
report back on its views this week. But the province said on
Tuesday it had delayed that report until April 21, just a week
and a half before the May 2 federal election.

“We’re in the middle of an election, anything can become
political really quickly… I think it will be used as a
political issue and I don’t think anyone’s going to be able to
convince the public that it’s a good thing,” said Alison
Crosthwait, director of global trading strategy at Instinet.

Ontario’s all-party report is not legally binding, but it
is expected to carry weight with provincial securities
regulators, and with federal government officials.

“I believe (Australia’s) doing the right thing and that’s
the question we have to ask ourselves here in Ontario,” said
Gilles Bisson, the only member of the left-wing Ontario New
Democratic Party on the provincial review committee.

“I think (Australia’s decision) reflects what the public
feels and I think it reflects also what a lot of people in the
capital markets feel. If you can’t control those markets, what
the hell are you as a nation?”

But not everyone views the bids as comparable.

“It’s a very different deal,” said Renee Colyer, chief
executive of Forefactor, Inc, a global markets research and
consulting firm, noting that a London-Toronto exchange grouping
would be more like a merger of equals than the
Australia-Singapore one would have been.

“Just because one country does it, it means we should do it
too? That doesn’t make any logical business sense from a
business perspective.”
($1=$0.97 Canadian)
(Additional reporting by Claire Sibonney and Pav Jordan;
editing by Janet Guttsman)

Australia decision a new hurdle for TMX-LSE deal