New bidder for Toronto exchange has LSE on hop

Xavier Rolet, chief executive of the London Stock Exchange, was today locked in with advisers after his sweetened bid last night for the owner of the Toronto Stock Exchange was trumped within hours.

Maple, a group of 13 Canadian banks and pension funds, raised its cash offer from C$48 to $50 a share, increasing it total value to C$3.8 billion (£2.44 billion). It also said it wants to buy 80% of TMX's shares, up from its previous 70%.

The LSE is attempting to cement an all-share merger with TMX that values the Canadian business at slightly less than the consortium bid. Last night the offer was sweetened with promises of special dividends to both sets of shareholders. TMX investors would get a C$4 dividend and LSE holders 84.1p if the deal is completed.

But the speed and relatively aggressive way in which Maple responded clearly caught the LSE and its advisers on the hop. Its shares today dropped 61⁄4p to 9633⁄4p.

"The ball is firmly back in Xavier's court," said one investor. "He has got to do a transformational deal or he could well face being taken over himself."

The LSE has failed to merge with Deutsche Börse and seen off two takeover bids from Nasdaq OMX in the past decade. Competition and leaps and bounds in technology have made it increasingly difficult for traditional exchanges to increase their profits.