Scotiabank headquarters on on King St., in Toronto’s financial district.Fernando Morales/The Globe and Mail
Bank of Nova Scotia is selling practically its entire stake in TMX Group Ltd. five years after it acquired these shares, reasoning that its investment in the Canadian exchange operator is a "non-core holding."
The bank has agreed to sell 2.75 million shares of TMX for a gross price of $67 apiece, it said in a news release this week. Pension fund Alberta Investment Management Corp. is also selling the same amount of shares for the same price, leaving it with a minimal position in TMX – if any at all. Together, this represents 9.9 per cent of TMX's shares outstanding.
Scotiabank and AIMCo were part of a consortium led by Canadian banks and pension funds that took control of TMX in 2012 for $50 a share in a landmark $3.8-billion transaction. During the process, the consortium, known as the Maple Group, thwarted London Stock Exchange Group PLC's attempt to buy TMX in a bid to keep the country's largest exchange operator in Canadian hands.
As part of the terms of the Maple deal, the big banks in the consortium – CIBC World Markets Inc., National Bank Financial & Co. Inc., Scotia Capital Inc. and TD Securities Inc. – agreed to maintain a minimum stake in TMX for a five-year period. Since 2013, that minimum position has been at least 5.65 per cent. That lock-up agreement, which didn't apply to pension funds or other investors, expired last month.
Once Scotiabank completes the sale of its 2.75 million shares, the bank would have "disposed of substantially all" of the stock it had acquired in 2012 through Maple Group Acquisition Corp., Scotiabank spokeswoman Debra Chan said Tuesday.
"This has been a good investment for us over the past five years, and it is a non-core holding of the bank, which is why we decided to sell now," she added in an e-mail.
The terms of the Maple deal also granted the four banks, AIMCo, the Caisse de dépôt et placement du Québec and the Ontario Teachers' Pension Plan Board the right to nominate one director to sit on the board of TMX either until September, 2018, or when the investors cease to own a minimum of 5 per cent of TMX's shares.
As a result of this trade, both Scotiabank and AIMCo will no longer be entitled to appoint nominees to the board.
This isn't the first time that AIMCo has decreased its stake in TMX. Last August, AIMCo, the Caisse and Teachers' each sold 1.8 million shares in TMX Group for $57.70 per share, leaving each pension fund with an interest of about 5 per cent.
A spokesperson for AIMCo declined to comment further. An official for TMX also declined to comment.
Shares of TMX fell 4 per cent on Tuesday to $67.75. So far in 2017, the stock has fallen 5 per cent.