Hong Kong Stock Exchange Pulls Bid For London Counterpart

Darnell Taylor
October 8, 2019

Hong Kong's stock exchange has dropped its multibillion-dollar bid for the prized London Stock Exchange (LSE).

LSE shares slid 6.1 per cent by 0805 GMT, close to their lowest since Hong Kong Exchanges and Clearing Ltd (HKEX) announced its approach on September 11, while the Hong Kong bourse's stock was up 2.3 per cent near the end of its trading day.

In its statement of defeat on Tuesday, HKEX said: "Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realising this vision, and as a effect has decided it is not in the best interests of HKEX shareholders to pursue this proposal".

One of the conditions of the Hong Kong company's proposed offer had been that LSE needed to drop its plans for a US$27bn merger with USA-based data specialist Refinitiv that the United Kingdom company announced in July. The Hong Kong exchange had said the LSE would have to ditch the Refinitiv purchase for its offer to go ahead.

Subsequent efforts by the Hong Kong exchange to engage with LSE shareholders had also met with resistance, with some investors telling Reuters the HKEX would have to raise its offer by at least 20 percent - mostly in cash - to tempt LSE shareholders.

HKEX said in a statement Tuesday that it was "disappointed" to pull its bid but that it was in the best interests of shareholders to do so.

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The takeover would have derailed the 321-year-old City institution's own $27bn (£22bn) deal to buy financial data provider Refinitiv.

LSEG shares slid to stand down 5.2 percent to £70.60 in London afternoon trading. "Our goal is to keep moving forward, reinforcing HKEX's role and building Hong Kong's strength as a financial market".

"It turns out they have not".

HKEX had until Wednesday to follow up its initial takeover proposal with a firm bid. "It may not be a stock exchange, but other related areas", said Bocom's Hong.

The original unsolicited bid took markets by surprise, given the LSEG had already secured a $27 billion deal with Refinitiv.

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