Bidders for the operator of Canada's largest stock exchange stepped up their last-minute push for votes on Monday as the deadline loomed for TMX Group shareholders to decide between a takeover offer from the London Stock Exchange or from a home-grown rival.
Shareholders are set to vote on Thursday on the LSE's friendly bid for TMX Group, which operates the Toronto Stock Exchange, and the heads of the LSE and TMX argued the case for their deal in a conference call on Monday.
They said they were highly confident of success in Thursday's vote and had no intention of delaying it to try to gather more support.
(It) makes sense that the vote should continue to go on as scheduled, unless we and the LSE group decide to defer it, TMX Chief Executive Tom Kloet said. At this point, that's not something that we have put on the table as something we're going to do.
Hours earlier, the Maple Group consortium of Canadian financial institutions and pension funds insisted on its own conference call that its bid was superior to the LSE's offer by C$5 a share.
In essence, we are offering more cash today and more value tomorrow, Maple spokesman Luc Bertrand told analysts and reporters, days after both sides sweetened their respective offers.
While the two sides lobbied via speaker phone, a group that includes a number of independent Canadian financial firms threw its support behind the LSE, saying a successful Maple bid would create a monopoly in which Canada's exchanges would be owned and managed by many of their most powerful participants.
Our goal is to have exchanges that have independent ownership and management and that operate without conflict in a flourishing competitive market, the independents said in a statement, signed by the heads of Caldwell Securities, Raymond James, CI Financial and Haywood Securities, among others.
TMX shares fell 2.9 percent to C$43.89 in Toronto, while LSE finished 1.1 percent lower to end at 937 pence in London.
The last-minute war of words is a sign of how tight the vote is expected to be.
It seems really split. I still think the Maple Group is going to win out in all this. They have a lot of clout in this country, said Alison Crosthwait, director of global trading strategy at Instinet. But the largest TMX shareholder, the CEO of CI, came out and said: 'I support the LSE.' It's going to be really tight, I think.
Maple stresses national pride and the need to keep a crucial domestic asset in Canadian hands, but the LSE-TMX group rejected that argument.
My personal belief is the Maple project has got absolutely nothing to do with Canadian ownership. None whatsoever, said LSE Chief Executive Xavier Rolet.
I think it has everything to do with a small number of very large traders wanting to establish their control over what fundamentally should remain a very neutral piece of financial infrastructure.
The Maple bid has raised some antitrust concerns as a key component of its plan is to fold Alpha Group, the country's biggest alternative trading system operator, into the new company. The combination would give the TMX-Maple entity more than 80 percent of the market.
Pressed during the call whether Maple would divest Alpha if the Competition Bureau requests it, Bertrand said the consortium was willing to talk.
If it means we have to have a discussion with the bureau on an arrangement of some kind, definitely we will sit down and do that, he said, adding it was too early to speculate.
The LSE, billing its proposal as a merger of equals, promises to create a transatlantic exchange that would be a powerhouse of mining and energy listings. LSE would have 55 percent of the new company, and TMX shareholders 45 percent.
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.
The Maple consortium's 13 members own about 6 percent of TMX shares.
The LSE's mostly stock offer is worth C$3.6 billion ($3.64 billion), including a cash dividend to TMX shareholders. The rival cash-and-stock offer from Maple comes in at around C$3.8 billion.
But even the value of the respective deals was up for debate as the clock ticked down toward Thursday's vote.
On his conference call, Bertrand took issue with the math as various parties tried to put a dollar value on the deals.
The LSE takeover is currently worth C$45 per share, and not C$49 as some media have reported. That's because the special dividend actually doesn't add C$4 of value, it simply takes from Peter to pay Paul, he said.
(Additional reporting by John McCrank, Pav Jordan and Solarina Ho; editing by Rob Wilson and Peter Galloway)