SCENARIOS-Possible options as vote looms on LSE bid for TMX

TORONTO, June 28 Tue Jun 28, 2011 4:15pm EDT

TORONTO, June 28 (Reuters) - Here's what could happen as shareholders of Canada's largest stock exchange operator get set to vote on a C$3.6 billion ($3.7 billion) takeover bid from London Stock Exchange (LSE.L), which competes with a hostile bid from a consortium of Canadian banks and pension funds.

TMX Group (X.TO) shareholders vote on June 30 on the LSE offer. Many proxies are already in, which means the two companies may already know if the deal will go through.

Following are scenarios that M&A experts say might unfold as proxies and votes are tallied:

TMX, LSE DEFER THE VOTE

If the TMX and LSE see the proxy votes pointing toward a defeat, they could postpone the June 30 vote to a later date as they lobby for more support, arguing that shareholders need more information to decide.

Some shareholders have complained about having to vote before it's clear whether the LSE bid will pass regulatory muster under the Investment Canada Act, which says foreign takeovers must be of net benefit to the country.

The option to defer the vote is on the table until the 11th hour -- the shareholder meeting is set for 10 a.m. EDT on Thursday. The TMX could either postpone the whole meeting, or -- more likely -- just say the vote will not take place.

The TMX has repeatedly said it does not plan to postpone the vote. It says there is broad support for the plan to create a transatlantic alliance that will be especially strong in mining and resource stocks.

Likelihood: possible

TMX, LSE SWEETEN BID, DEFER VOTE

There's still a small window of time for the LSE to sweeten its bid again, and defer the vote to another date.

But the LSE is unlikely to want to put more money on the table as this would destroy its original description of the deal as a merger of equals.

Likelihood: unlikely

SHAREHOLDERS APPROVE LSE BID

Many experts say the vote is too close to call, but support for the LSE proposal from proxy advisory firms may give the LSE something of an edge. [ID:nN1E75R0T5]

Attention will then turn to the regulatory hurdles facing the LSE's takeover, including federal and provincial approvals. Assuming regulators approve, a new transatlantic exchange, LTMX Group plc, will be created. If they don't, Maple could step back in and proceed with its own transaction.

Likelihood: A 'yes' vote is possible, but regulatory approval is likely to be very difficult and take a long time

SHAREHOLDERS VOTE AGAINST THE LSE BID

A 'no' vote would end LSE's chances of acquiring TMX unless it sweetens its offer, reopening the bidding war with Maple Group.

Likelihood: A 'no' vote is possible, but a sweetened bid is considered unlikely.

($1=$0.98 Canadian) (Reporting by Pav Jordan and Trish Nixon; editing by Janet Guttsman and Rob Wilson)