July 4, 2012 Comments

U.S. markets were closed today. The TSX gained another 0.5%

Well before the market opened this morning, the TMX group and Maple group announced positive news about the deal being approved but indicated the Competition Bureau approval, although looking positive, was still needed. TMX Group rose a little on the news.

A few hours into the trading day the Competition Bureau issued a press release that it was not going to oppose the deal. The price then shot up some more. The total gain today was 3.3% with about 2% coming on the Competition Bureau press release.

It’s hard to understand how a regulatory body like the Competition Bureau could be so irresponsible as to release this news during the trading day. This kind of thing caused harm to those few trades that go through just after the news comes out with the buyer aware of the news and the seller unaware. It’s not fair. However, it was just a few shares traded before the price adjusted to the news so not that big a deal. Still it is shameful conduct, in my opinion.

The other concern about this deal is how a near-monopoly like TMX can be allowed to join with its largest competitor. If this is how things are done, then, in my opinion, the Competition Bureau should certainly be shut down as an apparently worthless government agency. If you consider whether any large company in Canada has any real alternative to listing on the TMX, I think the answer you will arrive at is “no”. No choice would imply a monopoly on the listing business. It’s interesting that the head of the Competition Bureau announced her resignation a week or so ago. I wonder if she was pressured to approve this deal?

Turning to Research in Motion, RIM, I read the editorial by its CEO in today’s Globe and Mail. While every CEO can be counted on the say everything is fine even as the ship sinks, this CEO did strike me as knowledgeable and sincere. I am tempted buy some RIM shares but have no immediate plans to do so. It’s going to be about 8 months (or more) before we see the launch of Blackberry 10. On the other hand a takeover deal could come at any time. Even if Blackberry 10 is as valuable as the CEO seems to think, I suspect the apparently unknowledgeable Board at RIM would jump at any takeover offer. Other than the CEO I don’t think any of them have an technical knowledge or even any consumer goods experience.