Canada's
premier exchange group to expand its presence in the Transfer
Agency and Corporate Trust business
TORONTO, Sept. 25, 2020 /CNW/ - TMX Group Limited
(TMX Group) today announced it has entered into an agreement to
acquire AST Investor Services Inc. (Canada), and its subsidiary AST Trust Company
(Canada), a leading provider of
transfer agency, corporate trust and related services to Canadian
public and private companies from a subsidiary of Armor Holdco,
Inc. (Armor), a portfolio company of Pacific Equity Partners (PEP),
for $165 million in total
consideration, which includes $30
million of cash for regulatory and non-regulatory purposes,
subject to customary closing conditions and working capital
adjustments.
"The acquisition of AST Trust Company (Canada) will significantly strengthen TMX's
ability to serve the needs of companies across the marketplace by
bringing to our TSX Trust business a proven team of industry
professionals, and a wider range of products and technology
capabilities," said John McKenzie,
Chief Executive Officer, TMX Group. "From a strategic perspective,
this transaction will help to accelerate TSX Trust's growth and
enhance its competitive position, deepening relationships with
existing clients and broadening the scope and scale of its service
offerings."
AST Investor Services Inc. (Canada) and AST Trust Company (Canada) offer a comprehensive portfolio of
products and services, currently including transfer agency
services, equity plan solutions, corporate trust, structured
finance and proxy related services. AST Investor Services Inc.
(Canada) and AST Trust Company
(Canada) have approximately 150
employees in offices in Toronto,
Montreal, Calgary and Vancouver. Armor's U.S. operations, including
American Stock Transfer & Trust Company, LLC and D.F. King
& Co., Inc., are not a part of this transaction.
"I am very confident that the Canadian business will continue
its record of success going forward under TMX ownership," said
Marty Flanigan, Chairman of AST
Trust Company (Canada) and
President and CEO of Armor. "This transaction provides scale and
creates value for our clients, partners and employees."
"We are excited to see the business transition into the hands of
a respected Canadian financial institution, and we look forward to
seeing the business grow under TMX's direction," said Alex Ovchar, Associate Director at PEP and AST
Trust Company (Canada) Board
Member.
Summary details:
- AST Trust Company (Canada)'s
last twelve months (LTM) unaudited revenue through June 30, 2020 was $46.5
million (including $8.0
million of margin income) and adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA)1
was $11.6 million, excluding indirect
corporate allocations from the parent
company.2
- Over 50%² recurring revenue for the year ended June 30, 2020.
- The transaction is expected to have a positive impact on TMX
Group's adjusted earnings per share (EPS)¹ (excluding amortization
of acquired intangibles and integration costs) in the first full
year of ownership, before expected synergies.
- We expect to realize combined revenue and technology cost
synergies of approximately $8.0
million over the first two years, following
acquisition.3
- The transaction is expected to be financed with a combination
of cash and debt capacity.
- The transaction is expected to close within 6 to 12 months,
subject to receipt of regulatory approvals under the Competition
Act (Canada) and Trust and Loan
Companies Act (Canada).
National Bank Financial Inc. is acting as the exclusive
financial advisor to TMX Group on the transaction. Torys LLP is
acting as the legal advisor.
Macquarie Capital is acting as financial advisor and Blake,
Cassels & Graydon LLP (Blakes) is acting as legal advisor to
AST Trust Company (Canada) on the
transaction.
Caution Regarding Forward-Looking Information
This press release of TMX Group contains "forward-looking
information" (as defined in applicable Canadian securities
legislation) that is based on expectations, assumptions, estimates,
projections and other factors that management believes to be
reasonable as of the date of this press release. Often, but not
always, such forward-looking information can be identified by the
use of forward-looking words such as "plans", "expects", "is
expected", "budget", "scheduled", "targeted", "estimates",
"forecasts", "intends", "anticipates", "believes", or variations or
the negatives of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved or not be taken, occur or be
achieved. Examples of forward-looking information in this press
release include, but are not limited to: factors relating to
capital market condition, financial condition, operations and
prospects of TMX Group, the proposed timing for the completion of
the acquisition of AST Trust Company (Canada), the anticipated benefits and
synergies from the acquisition of AST Trust Company (Canada), the ability to obtain required
regulatory approvals, financing, the expected benefits of the
acquisition to TMX Group's earnings and adjusted earnings per
share, the composition of AST Trust Company Canada's client base
and the products and services it will provide, each of which are
subject to significant risks and uncertainties.
____________________________
|
1 Adjusted
EBITDA and adjusted EPS provided above are Non-IFRS measures and do
not have a standardized meaning prescribed by IFRS and are,
therefore, unlikely to be comparable to similar measures presented
by other companies. TMX Group presents adjusted EBITDA and adjusted
EPS to indicate operating and financial performance exclusive of
the items shown above and other items as disclosed in our Q2 2020
MD&A, because these adjustments are not indicative of
underlying business performance. Management uses this measure
because it believes doing so results in a more effective analysis
of underlying financial performance, including in some cases, our
ability to generate cash. Excluding these items also enables
comparability across periods. The exclusion of certain items does
not imply that they are non-recurring. Adjusted EBITDA as
calculated for the purposes of this acquisition excludes indirect
corporate overhead.
|
2 Revenue,
adjusted EBITDA and recurring revenue are compilations of financial
information provided to us by AST Trust Company (Canada). This
information is unaudited and may not be prepared in accordance with
IFRS for public companies.
|
3 Based on
internal analysis.
|
Forward-looking information, by its nature, requires us to make
assumptions and is subject to significant risks and uncertainties
which may give rise to the possibility that our expectations or
conclusions will not prove to be accurate and that our assumptions
may not be correct. Such factors include, but are not limited to:
market competition; economic conditions generally; adverse effects
on our results caused by global economic uncertainties (including
Covid-19); regulatory constraints; the level of activity on our
markets, and particularly the level of trading in TMX Group's key
products; the amount of revenue and cost synergies resulting from
the acquisition of AST Trust Company (Canada) and the continued availability of
financing on appropriate terms for future projects, including the
acquisition of AST Trust Company (Canada). A description of the above-mentioned
items is contained in the section Enterprise Risk Management of our
2019 Annual MD&A and also in the section Update to Enterprise
Risk Management in our Q2 2020 Interim MD&A.
We have no intention to update this forward-looking information,
except as required by applicable securities law. This
forward-looking information should not be relied upon as
representing our views as of any date subsequent to the date of
this press release. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking information.
About TMX Group (TSX:X)
TMX Group operates global markets, and builds digital
communities and analytic solutions that facilitate the funding,
growth and success of businesses, traders and investors. TMX
Group's key operations include Toronto Stock Exchange, TSX Venture
Exchange, TSX Alpha Exchange, The Canadian Depository for
Securities, Montréal Exchange, Canadian Derivatives Clearing
Corporation, and Trayport which provide listing markets, trading
markets, clearing facilities, depository services, technology
solutions, data products and other services to the global financial
community. TMX Group is headquartered in Toronto and operates offices across
North America (Montréal,
Calgary, Vancouver and New
York), as well as in key international markets including
London and Singapore. For more information about TMX
Group, visit our website at www.tmx.com. Follow TMX Group on
Twitter: @TMXGroup.
SOURCE TMX Group Limited