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TORONTO (Reuters) - A consortium bidding for TMX Group (X.TO), the operator of Canada's biggest stock exchange, said on Friday it hopes to extend its $3.8 billion offer but is still working to resolve regulatory concerns.
TMX shares rose 6 percent as investors interpreted the statement from Maple Group, comprised of 13 Canadian financial institutions, as a cautiously optimistic sign that the long-delayed deal might succeed.
Maple said Canada's Competition Bureau and the Ontario Securities Commission were coordinating their reviews of the proposed takeover. Maple has said it is working with regulators on smoothing out any sticking points.
Maple signaled that any conditions the provincial regulator might place on the deal could ease what the federal competition authorities had earlier described as serious concerns.
That said, the consortium said it still could not guarantee it would extend its bid, which is due to expire on Monday. Maple has already extended it six times.
Critics worry that the deal would concentrate too much power in the hands of a single market and clearing operator controlled by Canada's dominant financial institutions.
The stock's 6 percent rise to C$45.43 was its biggest one-day gain since May 16, 2011, around the time Maple offered to buy the Toronto Stock Exchange operator for C$50 a share.
"The market is taking this thing as if the deal is more likely to occur than not. A lot of people are looking for signals right now," said Nick Thadaney, chief executive of the Canadian arm of research broker ITG. "But this press release should not be seen as it being signed, sealed and delivered."
In addition to the getting consent from the OSC and the Competition Bureau, Maple requires approval from securities commissions in British Columbia, which is expected to draft rules for public commentary, as well as Alberta.
Quebec's Autorité des marchés financiers said in March it intends to approve the deal.
"As we have said all along, the commissioner's views may be affected by further information and developments. Our message to the parties today is consistent with that approach," said Greg Scott, a spokesman for the Competition Bureau.
Beyond those regulatory hurdles, the complex deal demands coordination among 13 key players making up the Maple Group, a challenging feat given the fact the deal proposal is nearly one year old, market observers say.
The group comprises several of Canada's top banks, as well as pension funds and institutional investors.
The OSC is completing a set of conditions, known as draft recognition orders, under which it might let the deal proceed.
As part of its proposal, Maple wants to buy the Canadian Depository for Securities Ltd, or CDS, which clears and settles all trades in Canada, and fold it into TMX, the operator of most of the country's securities exchanges.
That has spurred fears that clearing and settlement of transactions would favor Maple shareholders.
Another area of concern is that the CDS would turn into a for-profit model from its current cost-recovery model, which could boost prices. To get the deal done, Maple has said it is ready to give the OSC a role in overseeing clearing and settlement pricing.
Another sticking point is Maple's plan to acquire Alpha Group, TMX's biggest domestic competitor. Alpha - an alternative trading system that now has full status as an exchange - is owned by some of the members of the Maple consortium.
Critics say such concentration of power must be supervised, given that a combined TMX-Alpha entity would control some 85 percent of all stock trades in Canada.
Maple's members include big banks Canadian Imperial Bank of Commerce, National Bank of Canada and Bank of Nova Scotia, as well insurer Manulife as the pension fund managers for Canada, Quebec, Ontario Teachers and Alberta.
Reporting By Euan Rocha and Jennifer Kwan; Editing by Frank McGurty