Maple, LSE talk tough in last-minute dash for TMX

TORONTO (Reuters) - Bidders for the operator of Canada's largest stock exchange stepped up their last-minute push for votes on Monday as the deadline loomed for TMX Group shareholders to decide between an offer from London Stock Exchange or a home-grown rival.

With shareholders set to vote Thursday on the friendly LSE bid, the public face of the rival Maple Group consortium of Canadian financial institutions and pension funds took to a conference call to insist the group's bid was superior to the LSE's offer by C$5 a share.

"In essence, we are offering more cash today and more value tomorrow," spokesman Luc Bertrand told analysts and reporters on Monday, days after both sides sweetened their respective offers for the owner of the Toronto's Stock Exchange.

In the spirit of dueling conference calls, the heads of the LSE and TMX were set to argue the case for their friendly deal in their own call with analysts and reporters later on Monday -- both sides having apparently decided that talk is cheaper than upping the ante again, at least for now.

While Bertrand lobbied via speaker phone, a group that includes a number of independent Canadian financial firms threw its support behind the LSE, saying a successful Maple bid would create a monopoly in which Canada's exchanges would be owned and managed by many of their most powerful participants.

"Our goal is to have exchanges that have independent ownership and management and that operate without conflict in a flourishing competitive market," the independents said in a statement, signed by the heads of Caldwell Securities, Raymond James, CI Financial, and Haywood Securities, among others.

The last-minute war of words is a sign of how tight the vote is expected to be.

"It seems really split. I still think the Maple Group is going to win out in all this. They have a lot of clout in this country," said Alison Chrosthwait, director of global trading strategy at Instinet.

"But the largest TMX shareholder, the CEO of CI, came out and said: 'I support the LSE.' It's going to be really tight, I think," Chrosthwait said.

While Maple stresses national pride and the need to keep a crucial domestic asset in Canadian hands, the bid has raised anti-trust concerns.

A key issue in Maple's bid is its plan to fold Alpha Group, the country's biggest alternative trading system operator, into the new company. The combination would give the TMX-Maple entity more than 80 percent of the trading market, raising competition concerns.

When pressed during the call whether Maple would divest Alpha if the Competition Bureau requests it, Bertrand said the consortium was willing to talk.

"If it means we have to have a discussion with the bureau on an arrangement of some kind, definitely we will sit down and do that," he said, adding it was too early to speculate.

The LSE, billing its proposal as a merger of equals, promises to create a transatlantic exchange that would be a powerhouse of mining and energy listings. LSE would have 55 percent of the new company, and TMX shareholders 45 percent.

A Reuters poll last week found that six of 11 TMX investors backed the Maple bid, three supported the LSE offer and two were undecided.

Maple's 13 members own some 6 percent of TMX shares.

The LSE's mostly stock offer is worth C$3.6 billion ($3.64 billion), including a cash dividend to TMX shareholders. The rival cash-and-stock offer from the Maple consortium comes in at around C$3.8 billion.

But even the value of the respective deals is ripe for debate as the clock ticks down toward Thursday's vote.

On his conference call, Bertrand took issue with the math as various parties tried to put a dollar value on the deals.

"The LSE takeover is currently worth C$45 per share, and not C$49 as some media have reported. That's because the special dividend actually doesn't add C$4 of value, it simply takes from Peter to pay Paul."

(Additional reporting by John McCrank, Pav Jordan and Solarina Ho; editing by Rob Wilson)

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