Investment

Hong Kong Exchange makes $36.6 billion bid for LSE

Bloomberg/Chris Ratcliffe

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Hong Kong Exchanges & Clearing was created in 2000 after the merger of stock and derivatives exchanges in Hong Kong. The company went public later that year.

Wednesday 11, September 2019

Hong Kong Exchanges & Clearing (HKEX) made an unexpected $36.6 billion bid for London Stock Exchange Group (LSE), a bold move that would upend the UK bourse’s combination with Refinitiv, reported Bloomberg.

The Hong Kong bourse stated that under the proposal, HKEX would offer 2,045 pence as well as 2.495 newly issued HKEX shares per LSE share, that values each LSE share at 8,361 pence.

The LSE’s board remains committed to the acquisition of data provider Refinitiv, highlighting the hurdles facing an offer that it called unsolicited, preliminary and highly conditional. The board said it would consider the proposal and make a further announcement later.

LSE’s shares pared earlier gains, reflecting scepticism that a deal can be done in the face of escalating tensions with China over Hong Kong and the view that the $27 billion takeover of Refinitiv would allow LSE to push into financial data, offering a more secure future than a combination of stock exchanges.

Additionally, for HKEX, the deal promises a base away from the increasingly fraught political climate at home.

The Refinitiv deal was a bet by LSE on a future dominated by data, as the three-century-old exchange looks for ways to extend its global reach. Acquiring Refinitiv, the former financial and risk unit of Thomson Reuters, would help the London bourse expand further into data analysis.

An HKEX-LSE pact would put an end to the Refinitiv purchase, instead creating a global trading power that would have stock, derivatives and commodities exchanges, as well as clearinghouses across two continents.

Both exchange operators have been involved in bourse merger deals in recent years, with LSE failing in its attempt to combine with Deutsche Boerse and HKEX acquiring London Metal Exchange in 2012 for GBO 1.4 billion.

TAGS : LSE, HKEX , mergers and acquisition, Refinitiv

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