Northern opposes TSE-CDNX deal

Vancouver — A shareholder of the Canadian Ventures Exchange (CDNX) is opposing the Toronto Stock Exchange’s (TSE) proposed acquisition of Canada’s junior bourse.

Citing an unfair purchase price and failure to follow normal corporate governance procedures, Northern Financial (NFC-T), which holds a class A share of CDNX, says the deal should not proceed.

The TSE offered to acquire the CDNX earlier this year in a deal valued at $50 million. Under the acquisition, Northern would receive $381,679 for the CDNX share it purchased in January for $30,000. Despite the tidy profit, the company claims that, with $25 million in cash sitting in the CDNX kitty and expected operational savings hitting at least $25 million, the TSE is getting the CDNX at no cost.

Northern also says the acquisition does not follow corporate governance procedures which apply to a public company where transactions involve related parties, namely:

• the CDNX board did not appoint an independent committee to deal with the sale;
• it failed to recognize the related-party nature of CDNX shareholders who are not exclusive shareholders of the TSE;
• it failed to solicit competing offers; and
• no financial advisor was retained to determine the value of the CDNX.

Based on these complaints, Northern says the acquisition transaction should not proceed.