Odds begin to pile up against LSE’s offer for Canadian stock exchange

the odds are stacked against the London Stock Exchange in its bid to take over the operator of Canada’s biggest stock exchange, amid vocal endorsements for its made-in-Canada rival from investors, a billionaire activist and provincial politicians.
By The Newsroom
Published 28th Jun 2011, 10:19 BST

The LSE offer is worth around C$3.6bn, including a cash dividend to TMX Group shareholders. A rival offer from a bank-led Canadian consortium comes in at around C$3.8bn.

Shareholders, some still hoping for a sweetened bid, vote on the LSE offer on Thursday.

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“I will not decide how I will vote until these guys are finished with their games,” Richard Fogler, president of Kingwest & Company and a TMX shareholder, said last week after the two suitors raised their bids in quickfire success- ion.

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, whose 13 members own some 6 per cent of TMX shares, stresses national pride, and the need to keep a crucial domestic asset in Canadian hands.

The LSE, billing its proposal as a merger of equals, promises to create a trans-atlantic exchange that would be a powerhouse of mining and energy listings.

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LSE would have 55 per cent of the new company, and TMX shareholders 45 per cent.

“It’s essentially a grab that’s gone slightly wrong, and they (the LSE) can’t add dollars onto a bid, because of course, they started this as a merger of equals,” said a Canadian wealth mana- ger.

It added that the TMX, which supports the LSE offer, could delay the vote at any moment if it realises it can’t win the requisite two-thirds support.

TMX’s board recommends the LSE offer and intends to proceed with the vote.