London Stock Exchange rejects $32 billion Hong Kong takeover bid

The London Stock Exchange Group (LSE.L) has unanimously rejected a takeover bid from Hong Kong Exchanges and Clearing (HKEX) (0388.HK).

LSE said in a statement on Friday lunchtime that the board had “considered the unsolicited, preliminary, and highly conditional proposal” and concluded it has “fundamental flaws.”

“The Board has fundamental concerns about the key aspects of the Conditional Proposal: strategy, deliverability, form of consideration, and value,” the company said in a statement.

LSE said it would not engage further with HKEX and would instead focus on its acquisition of data business Refinitiv.

HKEX surprised the market on Wednesday with a £32bn bid for LSE. It said a merger of the two businesses would “connect East and West” and “offer customers greater innovation, risk management, and trading opportunities.”

Analysts said the deal looked unlikely from the start.

“There are only few instances of cross-continental exchange mergers that have been completed successfully, as nationalistic concerns often arise,” UBS analysts Michael Werner and Federico Braga said in a note to clients on Friday.

“Given the recent business disruptions in Hong Kong, we would argue that this adds to the potential perceived risk of a proposed LSE/HKEx merger.”

Analyst Benjamin Goy at Deutsche Bank said the deal would be “strategically and politically challenging.”

Shares in HKEX fell sharply on Thursday in Hong Kong as investors guessed the deal would be rejected. The stock price fall wiped around $1bn off the company’s value.

LSE shares jumped by 10% on Wednesday when the deal was first announced but the rally quickly faded.

Shortly after the rejection of the takeover proposal on Friday, LSE shares were trading up 1.1% on the day. The stock had been trading as much as 1.8% higher prior to the announcement.

LSE has been the target of several takeover bids over the years, most recently a proposed merger with Deutsche Borse in 2016. That deal was blocked by EU regulators on competition grounds.

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[atmark]

hong kong money is trying desperately get out of hong kong.

[kevinkang]

$32 billion only!? You’re telling me that a billionaire can just buy a stock exchange. Wow

[tednee]

伦交所打脸港交所回执：“We recognise the scale of the opportunity in China and value greatly our relationships there. However, we do not believe HKEX provides us with the best long-term positioning in Asia or the best listing / trading platform for China.
We value our mutually beneficial partnership with the Shanghai Stock Exchange which is our preferred and direct channel to access the many opportunities with China.
“港倒”概念制霸未来市场二十年！

[chrisholding]

Very suitable offer by the numbers considering England in reverse alphabetical order is 132
E=22 n=13 g=20 l=15 a=26 n=13 d=23 - I would advise checking the math before publishing

[MrNicholasbiddle]

They'll wish they had accepted in a few months

[synecdoche]

hong kong isn’t a strong economic force anymore, no point in buying them

[vanecadena]

Quiero saver si es real o. Bueno invertír en esta empreza

[spiritbuu]

Damn UK accent is horrible. Sounds like he's being prodded as he's speaking.