HKEX £32bn bid for LSE faces rejection
The Hong Kong bourse’s £32 billion bid for the London Stock Exchange faces rejection amid doubts about political risk and deal structure, according to people briefed on the offer.
Hong Kong Exchanges and Clearing’s (HKEX) indicative offer, made public after the close of the city’s markets on Wednesday, also got a chilly response in London, where LSE shares finished up 5.9%, far short of the implied premium, according to Reuters.
The proposed deal aims to create an exchange powerhouse spanning Asia and Europe which would be better able to compete with US rivals such as the Intercontinental Exchange (ICE) and the Chicago Metals Exchange Group (CME).
Tough political and technical challenges to the deal have already surfaced and HKEX shares were off 3.3% in Hong Kong, under-performing the blue-chip Hang Seng Index.
HKEX’s proposal is conditional on LSE abandoning a $27 billion acquisition of financial information provider Refinitiv from US private equity firm Blackstone and Thomson Reuters.
That deal, which went public in late July, caused LSE’s shares to leap 15% on hopes Refinitiv’s financial data business would boost its long-term profitability. LSE said in a statement on Wednesday that it remained committed to the Refinitiv deal. Two people close to the board told the FT that it is leaning towards rejecting the Hong Kong approach.
HKEX has 28 days to make a firm bid for the LSE or walk away for six months.
The unsolicited bid on Wednesday from Hong Kong Exchanges and Clearing stunned investors in the LSE, one of London’s most high-profile financial institutions. In early trading in Hong Kong on Thursday, HKEX’s stock fell 3% wiping about $1bn in share capital from the company, which runs the world’s fourth-biggest equity market by turnover.