TMX Group Inc. will pay a special cash dividend of $4 per share when it closes its merger with the London Stock Exchange Group, sweetening the deal for shareholders of the Canadian stock market operator.
TMX also said Wednesday the combined company will also pay a regular dividend after the merger that is at least equivalent to the current quarterly rate of 40 cents per TMX share.
The moves are aimed at enticing shareholders to back the friendly merger, which has come under fire by some critics who argue it would put Canadian stock exchanges under the control of a foreign company.
The TMX insists it would provide huge growth potential in a rapidly consolidating global stock market industry and is more attractive than a rival all-Canadian bid led by banks and pension funds.
“The board and senior management believe that the agreed merger with LSEG will deliver the most value for shareholders, market participants and a broad array of stakeholders,” TMX chief executive Thomas Kloet said in a statement.
The move brings the friendly merger’s worth closer to the roughly $3.7-billion value of a rival hostile bid made by the Maple Group, a consortium of Canadian banks, pension funds, brokerages and insurers.
The TMX-LSE deal is valued at about $3.4 billion, based on the latest share prices, plus shareholders stand to receive an additional $300 million in the special dividend announced Wednesday.
In the new arrangement, LSE Group shareholders will also get about 84.1 pence — about C$1.32 per ordinary share — reflecting the merger ratio for the deal.
The combined company, which is to be called LTMX, will pay out a total of about C$660 million to the shareholders of both companies.
The special payment — and the promise of a generous dividend policy ahead — aims to entice shareholders to back the deal and defeat a rival offer from Maple Group.
For the Maple deal to go forward, TMX shareholders must vote down the proposed merger with the London Stock Exchange Group at a meeting on June 30.
The Toronto-London merger deal would see TMX shareholders receive 2.9963 shares in the new company for each TMX share to give them a roughly 45 per cent stake in the merged stock exchange operator.
The proposed Maple deal offers to buy 70 per cent of TMX for $48 per share, plus a process that will see current TMX shareholders receive a 40 per cent stake in the new company in exchange for their remaining shares.
Maple investors would end up holding the remaining 60 per cent.
Maple includes Alberta Investment Management, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, CIBC World Markets (TSX:CM), Fonds de solidarite des travailleurs du Quebec, National Bank Financial (TSX:NA), Ontario Teachers’ Pension Plan Board, Scotia Capital (TSX:BNS), TD Securities (TSX:TD), Desjardins Financial Group, Dundee Capital Markets (TSX:DC.A), GMP Capital (TSX:GMP) and Manulife Financial (TSX:MFC).
TMX shares, which were halted pending the announcement, were up 20 cents at $44 on the Toronto Stock Exchange.