Borse Dubai to consider selling LSE stake to facilitate TMX merger

Merger: last week it was announced that the LSE would merge with TMX in a £4.5 billion tie-up

11 April 2012

Dubai's stock exchange, Borse Dubai, may consider selling a part of its 20% stake in the London Stock Exchange to facilitate a merger between the LSE and the Toronto exchange operator TMX, local reports said today.

A senior Borse Dubai official told The National newspaper that the company would consider selling its stake in order to reduce its ownership in the joint exchange to less than 10%. The newspaper did not name the official.

Borse Dubai's Chairman Essa Kazim declined to comment on the report.

Under its current structure, Dubai's exchange would hold 11.3% of the combined entity, triggering the involvement of Canadian regulators.

"If we wanted the deal to go through, we would go below 10%," the official said on condition of anonymity.

The deal between the two exchanges has been clouded by mounting criticism in Canada over a foreign entity, such as the Borse Dubai, owning even a part of the Toronto stock exchange.

The Qatar Investment Authority, the Gulf state's sovereign wealth fund, owns a 15% stake in LSE, according to Reuters data, and the two combined would end up with a roughly 20% position in the new company.

Canada will review the London Stock Exchange's bid to take over the Canadian exchange operator TMX Group , Industry Minister Tony Clement said on Monday.

Borse Dubai executives are also not completely confident that the deal between the LSE and TMX will produce long term value, the newspaper reported. One executive said Borse Dubai would only sell if it could find a strategic buyer at the right price.

"We're not going to sell down just to make it easier for Xavier Rolet (the LSE chief executive) to do the deal," the exchange executive told The National.