The London Stock Exchange sweetened its friendly bid for the operator of the Toronto Stock Exchange to $4.1 billion on Wednesday, topping a hostile offer from a Canadian consortium.
Stepping in a week before TMX Group shareholders vote on its proposal, the LSE added some C$660 million ($680 million) to its bid in the form of special dividends of C$4 per TMX share and 84.1 pence per ordinary share of the LSE.
They bested the Maple deal by almost a dollar, said Alison Crosthwait, director of global trading strategy at Instinet, which operates Chi-X, Canada's second-largest alternative trading system.
She valued the new LSE deal at C$48.94 a share.
But it's not clear if the sweeter offer will be enough for shareholders, who are also looking at a cash-stock offer of $3.8 billion, or about C$48 a share, from the Maple Group of Canadian banks, pension funds and financial services firms.
Shareholders vote on the LSE offer on June 30.
I think it's inadequate, said Richard Fogler, a shareholder and president of investment firm Kingwest & Company. The LSE, by raising the bid, they've basically publicly stated that they don't have the votes to win.
Thomas Caldwell, whose firm Caldwell Securities holds TMX Group shares, said he expected Maple to sweeten its offer.
This is a close run deal, Caldwell told Reuters. I think the other side are going to come back with something more, something different and something more clarified.
TMX stock, halted pending the announcement, rose more than 1 percent before settling about 0.7 percent higher at around C$44.12 per share.
TMX also formally rejected the bid from Maple, which says it's made-in-Canada proposal is a better alternative. It said Maple failed to provide more clarity on its proposal or proof that its offer was superior.
It said Maple's bid would result in significantly increased leverage for the exchange operator.
Both proposals would face regulatory hurdles.
The LSE offer, which would leave it with control of 55 percent of the TMX, needs approval from provincial regulators and from federal Industry Minister Christian Paradis, who must determine if the offer is of net benefit to Canada.
The LSE and TMX say they plan to create a Transatlantic partnership with a strong position in mining and resource firms. Opponents say it puts a crucial Canadian asset in foreign hands.
The Maple deal, for its part, would have to pass anti-trust muster because its combination would give the new firm control of more than 80 percent of Canadian stock trades.
(Additional reporting by Andrea Hopkins, John McCrank, Solarina Ho and Euan Rocha; editing by Janet Guttsman)