Toronto, Montreal stock exchanges announce $1.3B merger

(CBC) - The Montreal and Toronto stock exchanges announced a $1.3-billion merger on Monday that will see the country's two largest stock exchanges become one.

The new organization will be managed from Toronto, but derivatives trading is expected to stay in Montreal, Radio-Canada reported.

In the stock and cash deal, Montreal Exchange shareholders would receive half a share of TSX Group and $13.95 in cash for each of their shares, according to the Canadian Press.

The Montreal Exchange's board of directors is recommending that its shareholders vote in favour of the combination.

The Montreal Exchange is Canada's only market for trading in derivatives, while the Toronto-based TSX Group consolidates the country's equity trading boards.

The merger had been rumoured for several months.

In earlier interviews, Montreal stock exchange president Luc Bertrand made it clear that he was in favour of the move.

Negotiations are reported to have been rocky. When Bertrand's name was put forward for president of the new exchange, the TSX Group was uncomfortable and merger talks fell apart as a result, the CBC's Amanda Margison reported.

With files from the Canadian Press