TMX Group (X) investor relations material

Deal rationale and strategic fit

• Acquisition of RAFI Indices accelerates transformational growth, tripling assets under indexing and expanding equity portfolio coverage, with a focus on fundamental, research-driven strategies.

• Enhances global reach, broadens product offerings, and unlocks new distribution channels, including direct brokerage and institutional mandates.

• Complements existing strengths in energy, thematic, and cap-weighted indices, strengthening presence in fundamental equity allocations.

• Aligns with long-term strategy to increase international, recurring, and data/analytics-driven revenue.

• Combines innovative index methodologies with advanced technology and distribution platforms.

Financial terms and conditions

• Purchase price is US$490 million (C$683 million), funded by debt through a loan facility maturing May 2027, with plans to refinance with long-term debt.

• Net tax benefit of approximately US$97 million (C$135 million) expected; net valuation is about 10.3x pro forma run-rate adjusted EBITDA.

• RAFI Indices' pro forma run-rate revenue and adjusted EBITDA as of March 31, 2026, are US$49 million and US$38 million, respectively.

• Leverage ratio expected to rise to 2.7x adjusted EBITDA post-closing, with a plan to return to the 1.5x–2.5x target range within a year.

• Transaction is expected to be accretive to adjusted EPS within 12 months of closing, before synergies.

Synergies and expected cost savings

• Primary synergies are revenue and growth acceleration, leveraging technology and distribution to scale RAFI's offerings.

• Integration onto the Index Factory platform and application of analytics engine expected to drive efficiency and product innovation.

• Mutually beneficial distribution relationships expected to drive net flows and recurring revenue.

• Revenue growth anticipated to align with high single to double-digit growth rates over the long term.