The London Stock Exchange's offer for Borsa Italiana is worth about 1.6 billion euros ($2.14 billion), sources close to the situation said on Friday, a shade above a reported rival bid from NYSE Euronext and giving Borsa heavy board representation.
The LSE bid, which Borsa Italiana will continue discussing on Friday, is mostly in shares with a small amount of cash, the sources said. It would see five board members in a new company from the Italian side and seven from London.
Borsa's value is under 30 percent of the total of the two companies but the LSE is giving Borsa, which ends up under its control, a premium at the board level, one of the sources said.
The bid could be rivaled by an offer of around 1.5 billion euros from the world's biggest stock market operator, NYSE Euronext, according to a report in the Wall Street Journal's online edition.
Borsa Italiana, Europe's fourth-largest by value of share trades, said it was only looking at the LSE offer.
At the moment the only offer under discussion is the one from the LSE, a Borsa spokeswoman said.
A Paris-based NYSE Euronext spokeswoman declined to comment on the Wall Street Journal report.
Stock exchanges are consolidating globally as they search for cost savings in an increasingly competitive trading environment.
Both the LSE and Borsa Italiana have come under the spotlight and the United States' Nasdaq Stock Market is already the LSE's biggest shareholder with a 30 percent stake.
Nasdaq, which is in the process of buying Nordic and Baltics market operator OMX, has indicated it would not make another European buyout until it felt comfortable with progress on this deal.
Deutsche Boerse AG, which runs the Frankfurt stock market, was not likely to make a counterbid as it digests a U.S. acquisition and sees limited benefits from such a merger, a source familiar with the matter said.
In slides prepared for Deutsche Boerse's investor day and posted on the company's Web site on Friday the exchange said it was focusing on organic growth and did not mention the takeover situation at Borsa Italiana.
NYSE Euronext was formed by the merger of the largest U.S. stock exchange with Paris-based Euronext.
The NYSE Euronext offer is at a preliminary stage and could be restructured, according to the Wall Street Journal. NYSE Euronext is the parent of the New York Stock Exchange.
LSE shares were up 1.3 percent at 1370 pence at 1044 GMT. NYSE Euronext shares in Paris were down 0.3 percent at 57.25 euros.
(Additional reporting by Raoul Sachs and Nick Antonovics in Paris, Peter Starck in Frankfurt, Nick Zieminski and Helen Chernikoff in New York and Mathieu Robbins in London)