June 23, 2011 / 9:43 PM / 7 years ago

Exclusive: Polled TMX shareholders favor Maple, still unsure

TORONTO (Reuters) - One week before a vote on the London Stock Exchange’s (LSE.L) friendly offer for TMX Group (X.TO), shareholders who talked to Reuters mainly favor a hostile home-grown bid, but the outcome is far from certain.

Speaking after a sweetened offers from each bidder, some shareholders said the LSE had not done enough to seal the deal at June 30 shareholders’ meetings of both companies.

“I told them they’d better bump the price or get off the deck,” Richard Fogler, President of Kingwest & Company, said of his meeting with LSE representatives on Wednesday, after the London bourse added a cash component to its all-stock bid in the form of a special dividend.

Fogler was one of two shareholders who told Reuters they had not yet made their minds up about whether to vote for the LSE bid. Three favored the LSE offer and six favored the hostile proposal from the Maple Group of Canadian investors.

In a poll last week, five shareholders preferred Maple, four were undecided, one was leaning toward LSE, and one wanted the exchange to remain independent.

On both occasions, Reuters attempted to contact over 120 shareholders. Those who replied hold roughly 5 percent of TMX shares, while Maple Group members — Canadian banks, pension firms and financial services companies — hold around 6 percent.

The LSE bid requires two-thirds approval from shareholders to pass at the June 30 vote, although it — like the Maple proposal — still faces regulatory hurdles.

REGULATORY OVERHANG TOO MUCH FOR SOME

“On a cash basis, the TMX appears to have the higher ground,” said Thomas Caldwell, chairman of Caldwell Securities. “From a strategic standpoint, LSE is superior.”

Caldwell dislikes the Maple bid because its backers are the main customers of the exchange, and because they also own Alpha, Canada’s largest alternative trading platform, which they want to bring under the TMX umbrella.

That raises the possibility that even if Maple beats out LSE, anti-trust concerns could derail the proposal.

LSE’s proposal must be deemed a net benefit to Canada by the government.

“We’re still leaning toward the Maple offer,” said a major shareholder whose firm’s policy is to not to comment to media.

“But to be honest, within the next dollar or two, we may just sell our shares. We’ve made a nice return and there’s going to be a lot of uncertainty on the regulatory side. I think that will remain as an overhang regardless of which bid goes forward.”

The cash component of the LSE bid brings its value to just under C$49 a share. Maple responded to that by boosting its cash-and-stock offer to C$50 a share, from C$48.

Additional reporting by Solarina Ho and Allison Martell; editing by Janet Guttsman

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