(Adds dropped words in second paragraph)
By Claire Sibonney
TORONTO, April 1 Ontario Finance Minister Dwight Duncan softened his tone on Friday regarding the London Stock Exchange's (LSE.L) proposed takeover of Canada's TMX Group, days before a legislative report on the offer.
The all-party legislative committee, appointed by the Liberal Ontario government, is due to release its report on the planned purchase of the operator of the Toronto Stock Exchange by April 7. The committee has met with banks, businesses, academics and investors as it draws up its position.
"First of all, I don't think I ever said it was a bad idea," Duncan told reporters on Friday. "I am waiting for the report of the legislative committee."
Duncan was initially one of the deal's most vocal critics, saying he was not convinced it was in the best interests of Canada's capital markets.
"They should quit calling it a merger," Duncan told media at the legislature the day the committee was announced.
"If it's an investment, great. If it's a takeover, and operations move to London, that's not what we're interested in," he said in February.
The architects of the all-stock deal initially touted the transaction as a "merger of equals" that would create a $7 billion transatlantic exchange doing $4 trillion in annual trading.
The all-party report will not be legally binding. But it will likely carry serious weight with Ontario securities regulators in the province, and with federal government officials who have veto power over LSE's bid.
Prime Minister Stephen Harper on Friday described the offer as complicated, and said provincial opinion would be important.
Powerful business groups that include Canada's second largest bank, the Toronto-Dominion Bank (TD.TO), are among the opponents of the deal, arguing that it will hurt Toronto's status as a financial center, and harm the prospects of Canadian companies looking to raise capital.
But the chorus of opposition has quietened recently.
"Once we have the legislative committee report, once we have the OSC's work, then we will look at next steps," Duncan said on Friday. (Reporting by Claire Sibonney and Pav Jordan)