Canada’s TMX Group to Acquire Razor Risk for A$10m, 1x Revenue

30th Nov 2011. Toronto stock exchange listed TMX Group Inc (TSX:X), the owner of the Toronto Stock Exchange, has announced a takeover bid for ASX-listed financial services risk software firm Razor Risk Technologies Ltd (ASX:RZR). The takeover has the support of Razor’s board and the two companies have entered into a Takeover Bid Implementation Agreement under which TMX Group, or its affiliate, will make a takeover bid for all of the issued shares in Razor.

The consideration payable under the TMX Group offer (Offer) is a cash payment of 3.49 cents per share, equivalent to an enterprise value of A$10m. This equates to a purchase price multiple of approximately 1x annual sales as of 30 June 2011.

Razor, which is headquartered in Sydney, provides credit risk software to clearing houses, stock exchanges, financial institutions and brokerages around the world. It develops and integrates economic capital, market, credit and liquidity risk management requirements across multiple asset classes.

In addition to the cash payment of 3.49 cents per share, if there is excess working capital in Razor at the earlier of (1) the Offer being declared unconditional and (2) the close of the Offer period, TMX Group will increase the Offer by such excess working capital at that time. Although it is not possible at this time to precisely estimate the additional consideration payable, this amount, if payable, is likely to be in the order of 0.1-0.2 cents per share. More details will be set out in the Bidder’s Statement and Target’s Statement, which will be sent to Razor shareholders as soon as practicable.

The Offer is subject to a number of bid conditions, including a 90% minimum acceptance condition and at least 50.01% of Razor shares accepted into the Offer within one month of the open of the Offer.

“The acquisition of Razor is exciting because it supports several areas of TMX Group’s strategy and it provides a point of entry into the attractive risk management sector,” said Brenda Hoffman, Senior Vice President, Group Head of Information Technology. “We are very pleased to be joining forces with the Razor employee team to offer our customers enhanced risk management services and products.”

The Offer is unanimously recommended by the Razor board, in the absence of a superior proposal. The individual Razor directors, who in total control approximately 25% of the ordinary shares in Razor, have advised that it is their intention to accept the Offer, or procure acceptance of the Offer, for all the Razor shares they own or control, in the absence of a superior proposal. “The Board’s responsibility is to act in the best interests of shareholders, and it is our view that this is a compelling and complete proposal which has the attraction of offering shareholders certainty in cash proceeds in an uncertain global economic environment,” said Ellis Bugg, Chairman of Razor.

The acceptance of the Offer by the Razor directors and the commitment of Razor’s major shareholder, together accounts for, in aggregate, approximately 40% of Razor shares.

About TMX Group (TSX-X)

TMX Group’s key subsidiaries operate cash and derivative markets for multiple asset classes including equities, fixed income and energy. Toronto Stock Exchange, TSX Venture Exchange, TMX Select, Montreal Exchange, Canadian Derivatives Clearing Corporation, Natural Gas Exchange, Boston Options Exchange (BOX), Shorcan, Shorcan Energy Brokers, Equicom and other TMX Group companies provide listing markets, trading markets, clearing facilities, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across Canada (Montreal, Calgary and Vancouver), in key U.S. markets (Houston, Boston and Chicago) as well as in London and Beijing. For more information about TMX Group, visit our website at www.tmx.com.

About Razor Risk Technologies Limited

Razor Risk Technologies is a leading provider of risk management technology and consulting solutions to financial institutions worldwide. Established in 1999 as IT Services roll-up IT&e, the company renamed itself to Razor in February 2009. The company’s Razor product has helped transform the way banks, hedge funds, brokers, central clearing counterparties and stock exchanges, in many countries, measure their risk and manage their capital.

An Australian public company (ASX: RZR) with offices in Sydney (headquarters), Melbourne, New York and London, Razor Risk Technologies has a highly skilled team of specialists who provide risk management technology and consulting services across the financial markets and risk management sectors. The company operates on a global risk consultancy structure, drawing upon the expertise of all employees in implementing best practices for clients’ individual needs. This methodology supports an efficient, low cost, minimal risk implementation, allowing clients to maximise optimal risk and reward. Razor Risk Technologies has a 100 per cent successful implementation record for Razor. For more information, please visit Razor Risk Technologies at: www.razor-risk.com.

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