Hong Kong Exchanges and Clearing (HKEX) has today made a £31.6bn ($39bn) takeover bid to buy the London Stock Exchange Group (LSEG).
The proposal values LSEG at 8,361 pence per share, representing a 23% premium to its price at the close of business yesterday evening (Tuesday 10 September).
It is also conditional upon the London bourse ditching its proposed $27bn acquisition of financial data provider Refinitiv, announced earlier this year.
HKEX chairwoman Laura Cha said: “We believe 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.”
The offer comes at a time of instability in both regions, as Brexit uncertainty continues to affect the UK economy, and political unrest in Hong Kong has seen mass protests take place in recent months.
London Stock Exchange takeover proposal aims to ‘connect East and West’
A potential deal is designed to exploit the “unique potential to enhance and capture global capital and data flows” offered by combining the two exchanges.
From a UK perspective, the proposed deal could present new opportunities to capture business from the growing Asian economy, while for the Hong Kong exchange it would solidify the region’s position as “the key connection between mainland China, Asia and the rest of the world”.
HKEX CEO Charles Li added: “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.
“A combined group will be strongly placed to benefit from the dynamic and evolving macroeconomic landscape, whilst enhancing the long-term resilience and relevance of London and Hong Kong as global financial centres.”
London Stock Exchange ‘remains committed’ to Refinitiv deal
The proposal to LSEG shareholders tabled today offers 2,045 pence per share and 2.495 newly issued shares in the Hong Kong exchange – valuing the London bourse at £29.6bn ($36.5bn).
Share prices in LSEG have risen sharply since the announcement – up 4% on yesterday’s value at the time of writing.
HKEX also noted that it intends to apply for a secondary listing of its shares on the London Stock Exchange if the transaction is completed, to demonstrate its “commitment to the UK”.
In 2012, HKEX purchased the London Metal Exchange for £1.4bn ($1.7bn).
The transaction would be financed through a combination of existing HKEX cash resources and new credit facilities.
LSEG said in a statement: “LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv Holdings Ltd as announced on 1 August 2019.
“A circular is expected to be posted to LSEG shareholders in November 2019 to seek their approval of the transaction.”
It added that its board would consider today’s proposal and make a further announcement in due course.
