TSX Group Considers Takeovers After Buying Montreal

Date: Friday, May 2, 2008
Author: Doug Alexander, Bloomberg.com

May 1 (Bloomberg) -- TSX Group Inc., owner of the Toronto Stock Exchange, is looking for more acquisitions in North America after completing its purchase of the Montreal Exchange Inc. derivatives market, interim Co-Chief Executive Officer Michael Ptasznik said.

``There's lots of growth industries for the combined organization,'' Ptasznik said in an interview in Toronto today. ``Obviously the focus will be on the integration, but we're going to continue to look for opportunities right now as well.''

TSX Group closed its C$1.08 billion ($1.06 billion) cash- and-stock takeover of Montreal Exchange today, combining Canada's equity and derivatives markets. The Toronto-based company will be renamed TMX Group Inc., subject to shareholders' approval of the name change at a June 11 meeting.

TMX Group aims to expand by pursuing takeovers in Canada and the U.S., where the company owns a stake in the Boston Options Exchange.

``The areas that we're focused on is small and medium enterprises, and also in the natural resource sector to build on the strengths that we have in the Canadian marketplace,'' Ptasznik, 40, said.

TSX Group rose C$3.37, or 8 percent, to C$45.67 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest gain in five weeks. The stock has fallen 14 percent this year.

New Executives

Ptasznik was appointed Co-CEO with Rik Parkhill in January. TSX Group started searching for a CEO to replace Richard Nesbitt, who quit to join Canadian Imperial Bank of Commerce. Luc Bertrand, who headed Montreal Exchange, was chosen deputy CEO when the takeover was announced in December. TSX Group plans to name a new CEO this month.

Montreal Exchange, founded in 1874, inherited most Canadian derivatives trading in 1999, when stock trading moved to the Toronto Stock Exchange.

``We're going to be able to offer seamless trading across two exchanges and multiple asset classes, which is really a big growth trend in the market,'' Parkhill, 51, said.

The revenue generated by merging the bourses will be ``far more significant'' than the cost savings, Parkhill said.

TSX Group estimates it will save C$25 million from integrating Montreal Exchange. TSX Group had 606 employees at the end of March, while Montreal Exchange had 227 workers.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net.