The Hong Kong Stock Exchange drew a $ 36.6 billion bid for its London rival, a deal that would have united two major trade hubs even though both are clouded in political turmoil.
Less than a month after it first unveiled the surprise proposal, Hong Kong Exchanges & Clearing Ltd., said it could not continue a takeover of the London Stock Exchange Group PLC without any input from LSE's management. The target's board had quickly rejected the approach.
The Hong Kong company had hoped that a tie-up would strengthen its role as the gateway to the flow of capital between mainland China and Western markets. But it said in a statement Tuesday that it was "not in the best interests of HKEX shareholders to pursue this proposal."
Hong Kong rolls from months of protests over concerns about China's intervention in the semi-autonomous city. Over the weekend, the Hong Kong government called for relief for the first time in half a century in an effort to curb the unrest. When LSE rejected HKEX's offer last month, it questioned Hong Kong's future as a financial gateway to China.
Meanwhile, Britain is negotiating a messy divorce from the European Union.
Deal or No Deal
The London Stock Exchange has been a favorite target and an active acquirer in the deal market, although many attempts have failed.
$ 1.55 Billion
LSE Market Debut
Financial Center  $ 1.65
$ 1 , 15
Stock Exchange and
$ 32.1 Billion
LSE October 7. HKEX clears for LSE to enter into a separate $ 14.5 billion plan to provide financial information and terminal company Refinitiv Holdings Ltd. from a Blackstone Group Inc.-led group. The Hong Kong group's bid was contingent upon its rival in London scrapping that deal. In a statement on Tuesday, LSE said the Refinance Agreement is still on track to expire in the second half of 2020.
Two days after HKEX published its proposal on September 11, LSE rejected the offer. It said the Refinitive Agreement was more strategically sound and would meet a less challenging review by the authorities. LSE and its competitors are increasingly focusing on selling financial data to counteract the pressure on fees from stock trading services and other more mature businesses.
HKEX had attempted to create an Asian-European stock exchange offering trading, clearing, settlement, data and risk management services spanning various asset classes, time zones and continents.
In a blog post on Tuesday, HKEX boss Charles Li said that "the vision for the business that looks forward is to build on the role we already play in Hong Kong, China, Asia and more widely." Available for further comment.
HKEX shares closed 2.3% higher on Tuesday, dropping 8.2% from the time the proposal was first closed, the deal was worth $ 36.6 billion at the time of the announcement, and around $ 34.4 billion based on HKEX's Friday closing price and newer rates. Hong Kong's financial markets were closed for a public Monday.
LSE shares fell more than 6% after the bid was withdrawn. stock up more than 70% for the year, with the bulk of the gains following the announcement of the Refinance Agreement.
Chinese acquisitions of foreign companies face increasing scrutiny from the Foreign Investment Committee of the United States, the United Kingdom and other Western countries government authorities were concerned that Beijing could access sensitive data and financial information.
HKEX had tried to address some of these concerns, taking note since 2012 of the London Metal Exchange. It said that the primary regulators of LSE's trading, clearing, data and other operations would continue to oversee these businesses, and the merged group would maintain a secondary listing in London.
The Hong Kong Group could have launched a formal hostile offer, and made its proposal directly to LSE shareholders. But it would have been an uphill battle without obvious support for the agreement from HKEX's own shareholders and given the market's positive response to the LSE-Refinitive bond.
founder and research chairman of the financial market research and consulting firm Tabb Group, said it was no surprise that HKEX withdrew the offer, especially with the Refinitive bid already on the table. "It had been a herculean effort to get it across the line," he said.
The London Stock Exchange has been involved in numerous mergers and acquisitions attempts over the past two decades. Cross-border exchanges are on the wane after they failed to merge with Canada in 2011
TMX Group Ltd.
and then in 2017 to join forces with Germany
Deutsche Börse AG
- Hong Kong shakes after long weekend of violence (October 7, 2019)
- London Stock Exchange rejects bid from rival Hong Kong Exchange (September 13, 2019)
- Charles Li Linked Hong Kong and China, but LSE deal may be a bridge too far (September 12, 2019)
- Heard on the street: Hong Kong's unwelcome $ 36.6 billion UK proposal (September 11, 2019)
- Hong Kong stock exchange offers nearly $ 37 billion for London Rival (September 11, 2019)
- London Stock Exchange Eyes $ 15 Billion for Blackstone Refinance (July 27, 2019)
- EU Blocks LSE, Deutsche Börse Merger (March 29, 2017)
- TMX, LSE Terminate Merger Deal (June 30, 2011)
—Quentin Webb contributed to this article.
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