Cossette shares rose on Wednesday after private equity firm Cosmos Capital raised its takeover bid for Canada's largest homegrown advertiser for the third time.

Shares of Cossette Inc were up 1.8 percent at C$7.94 in morning trading after rising as much as 4.5 percent earlier.

Cosmos, led by two former Cossette founders, offered late on Tuesday to pay C$131.5 million ($125.1 million), or C$7.87 a share, for the company and said it could bid even higher.

The offer matched a November 10 bid from U.S. private equity firm Mill Road Capital, securing lock-up agreements Cosmos has with holders of about 18.7 percent of Cossette stock. Cosmos itself already holds another 18.7 percent of Cossette.

Cossette, relatively small by international standards, is a giant in Canada, where it grew from a tiny shop in the early 1970s to a transnational company with clients including McDonald's Restaurants of Canada, Bell Canada, General Motors of Canada and Coca-Cola Ltd.

(Reporting by Pav Jordan; Editing by Lisa Von Ahn)