Ottawa takes stock of London, Toronto merger

OTTAWA, Feb 9, 2011 (AFP) - Canada's Industry Minister Tony Clement on Wednesday said he would review a landmark merger of the London and Toronto Stock Exchanges, if it is required.

The two groups earlier announced the merger to create the world's biggest trading platform that would dominate the raw materials and energy sectors.

Clement told a press conference his office would determine whether the provisions of the Investment Canada Act apply to the transaction and, if yes, he and his officials will review the transaction within a 45-day period.

"We will be looking at this transaction to see whether it's possible that the Investment Canada Act applies to it. If that is the case, we will have to review it," he said.

The act stipulates that foreign takeovers must be of a "net benefit to Canada" in order to be approved.

The enlarged group, which is to be jointly headquartered in London and Toronto, would have a combined market capitalisation of almost $7.0 billion dollars (5.1 billion euros).

It would span 20 trading markets and platforms across Europe and North America, and would be well-placed to tap into the booming commodities sector at a time of rocketing prices for commodities like copper and crude oil.

The group, provisionally called LSEG-TMX, would also be the world's largest exchange in terms of the number of companies traded, with a total of more than 6,700 listings.

And it would become the number one venue for international listings from emerging and growth markets, according to a statement.

The deal is expected to be completed in the second half of this year, subject to shareholder and regulatory approvals.

In parliament, New Democratic Party (NDP) leader Jack Layton sought assurances that the combination is indeed a "merger of equals and not a takeover," that regional interests are respected, and that Canadian oversight "of our stock markets" and access for smaller firms is maintained.

"Of course, Canadian companies need access to foreign capital, but not at the expense of our own capital markets," he said, calling for public hearings on the merger.

Canadian Prime Minister Stephen Harper declined to comment on the deal, and instead lampooned the socialist opposition leader for his defense of capitalism.

"Well, I guess you live to see everything when you hear the leader of the NDP in a patriotic defence of Canadian stock markets," Prime Minister Stephen Harper quipped.

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