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London Stock Exchange chief executive Xavier Rolet


London Stock Exchange Group PLC is "reviewing" its bid for TMX Group Inc. amid speculation that a sweeter offer will be needed to gain support from TMX shareholders in a crucial vote at the end of June.

When asked about shareholder calls for a higher price, LSE chief executive officer Xavier Rolet did not rule anything out, saying in an interview on Thursday that LSE is "reviewing the situation."

Holders of two-thirds of TMX shares must vote in favour of the LSE vote on June 30 for the planned merger to go ahead. Maple Group, a consortium of 13 Canadian financial institutions that has tabled a rival offer, has been actively campaigning against the TMX-LSE plan and has made its own proposal contingent on a "no" vote by shareholders.

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The two bids are currently close in price. The all-stock plan from London has a current value of $44.69 a share based on LSE's stock price. Maple values its cash and stock bid at $48, although it's hard to judge whether that's realistic without more detail from the group about key parts of its plan, such as what it would cost to roll in the Alpha trading system and how the new resulting company would operate.

Still, a large portion of Maple's offer, $33.60 a share, is in cash. That has raised some speculation that the LSE will have to raise its bid and add some cash to be successful.

Representatives from both sides are crisscrossing the country to meet with TMX shareholders to pitch their ideas and judge their chances of success.

Mr. Rolet said that he believes LSE is in a "good position in terms of the vote" and that he is getting positive feedback from TMX investors. "It's still very, very early for proxy returns but in private meetings, a lot of institutions are really starting to understand the full set of issues," he said.

The two sides are also engaged in an escalating war of words, with each challenging the other's assertions about their plans. Maple's chief executive, Luc Bertrand, told an audience in Calgary on Wednesday that "the LSE proposal makes no sense when weighed against Maple's alternative."

Mr. Rolet said Maple has created a "fear factor" with a "campaign of disinformation." But he didn't hesitate to shoot back, saying: "I don't have a crystal ball, but were Maple to go forward, I think many people in Canada will regret it very, very deeply."

A big issue for both bidders is regulatory approval. Each require approval from securities regulators. Maple requires approval from competition regulators, while the LSE-TMX plan needs the green light from the federal Industry department. LSE and TMX officials have been meeting with investors and arguing that the competition concerns are too big with Maple.

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The final factor in the decision is whether TMX investors favour the long-term business plan of London and TMX, which is to create an international exchange; or that of Maple, which wants to lock up the domestic market before looking at expanding abroad.

"It's really a choice about how confident Canadian institutions are in the future and spreading their wings, versus retrenching, and that's obviously a choice for Canadians, not us," Mr. Rolet said.

He said that, for the moment, he is focusing his attention on TMX shareholders. After the vote, assuming LSE's proposal is approved, Mr. Rolet said he will focus on key policy makers who have expressed concern about the London plan, such as Quebec Premier Jean Charest. Mr. Charest said this week that he prefers the Maple bid because it would keep the TMX Canadian-owned and help preserve Montreal's "niche" as a centre of derivatives expertise.

"There is ample room for discussions to reassure people. There are undertakings made to keep derivatives in Montreal forever," Mr. Rolet said.

TMX Group (X)

Close: $42.99, down 24ยข

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