Toronto Stock Exchange operator TMX Group (TSE:X) on Wednesday announced that it has inked a deal with Equity Financial Holdings (TSE:EQI) to buy its transfer agent and corporate trust services business for $64 million.
TMX said the acquisition will be funded from existing cash and credit facilities, and said it will provide “significant opportunities for growth”.
"This acquisition further diversifies our revenue base, opens new growth avenues and provides TMX Group with an even stronger offering for our customers," said CEO Tom Kloet. "Furthermore, TMX Group is uniquely positioned to build on Equity's success by expanding our relationships with listed companies and the capital markets advisory community."
The Equity business currently offers services to 700 clients, most of which are listed on Toronto Stock Exchange or TSX Venture Exchange.
TMX said the business supports public market activities by maintaining security holder registers, acting as a depositary agent for merger and acquisition transactions, and assisting issuers in discharging their obligation to hold meetings of security holders.
In 2012, the Equity business generated revenues of about $17 million and was profitable, TMX said, adding that that transfer agency and corporate trust services add to its existing offering, including investor relations, design services, shareholder data and tracking, and market analytics.
TMX expects the acquisition to add to earnings per share in the first year following the closing of the transaction, which is expected close at the end of March or early in April.
"With this acquisition we will further broaden our portfolio of services and enhance the value we can deliver to public companies," said president of TMX Markets and group head of Equities, Kevan Cowan.
Shares of TMX rose 0.18 per cent on the news, trading at $54.85, while shares of Equity shot up over 25 per cent, trading at $10.05 as at about 1:15 p.m. EDT.
TMX Group's main subsidiaries operate cash and derivative markets and clearinghouses for multiple asset classes including equities, fixed income and energy.
These include the Toronto Stock Exchange, TSX Venture Exchange, and the BOX Options Exchange.