London bourse says will consider unsolicited bid from HKEX

Business | 11 Sep 2019 6:57 pm

Bourse operator Hong Kong Exchanges and Clearing is making an audacious US$36.6 billion cash and shares bid for the London Stock Exchange, which has a history of rejecting foreign suitors.

The HKEX proposal requires that the London bourse not proceed with the US$27 billion deal to acquire Refinitiv Holdings announced on August 1, but the  London Stock Exchange Group plc said in a statement a while ago, it remains committed to and continues to make good progress on the acquisition.

The LSEG said it notes the unsolicited, preliminary and highly conditional proposal from Hong Kong Exchanges and Clearing and the board will consider the proposal and will make a further announcement in due course.

A merger that LSEG proposed with Deutsche Boerse fell through in 2017.

U.K. Business Secretary Andrea Leadsom, speaking on Bloomberg Television as news of the deal broke, said the British government would scrutinize any tie-up between the exchanges.

Leadsom said the U.K. authorities would “look very carefully at anything that had security implications for the U.K.”

Shares popped by 16 percent to £78.94, after the bid was made known in a Hong Kong Stock Exchange announcement.

“The proposed combination would strengthen both businesses, better position them to innovate across markets and geographies, and offer market participants and investors unprecedented global market connectivity,” the Hong Kong Exchanges and Clearing said.

The deal is valued at about £29.6 billion.

HKEX Chairman, Laura Cha, said that a combination of HKEX and LSEG represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe.

"Following early engagement with LSEG, we look forward to working in detail with the LSEG Board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses.”

Chief Executive, Charles Li Xiaojia said bringing HKEX and LSEG together will redefine global capital markets for decades to come.

"Both businesses have great brands, financial strength and proven growth track records. Together, we will connect East and West, be more diversified and we will be able to offer customers greater innovation, risk management and trading opportunities,'' he said.

"A combined group will be strongly placed to benefit from the dynamic and evolving macroeconomic landscape, whilst enhancing the longterm resilience and relevance of London and Hong Kong as global financial centers."

Under the propsed deal LSEG shareholders would receive per LSEG share: 2,045 pence in cash and 2.495 newly issued HKEX shares.

For the six months ended June 30, the LSEG Group reported post-tax profit of £265 million, compared with £283 million in the firat half of the year before.

Revenue increased by 7 percent to £1.01 billion. Total income was up by 8 percent to £1.14 billion.

 

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