Tuesday, 25 February, 2020

Hong Kong exchange stuns the City with swoop on London Stock Exchange

Hong Kong exchange stuns the City with swoop on London Stock Exchange Hong Kong exchange stuns the City with swoop on London Stock Exchange
Ginger Lawrence | 11 September, 2019, 14:25

The Hong Kong Exchanges and Clearing Limited has proposed a 31.6 billion pound takeover of the London Stock Exchange LSE.L , it said on Wednesday, just weeks after the London bourse announced a plan to merge with data company Refinitiv.

Hong Kong Exchanges & Clearing said earlier that it has offered 2,045p per share in cash and 2.495 newly-issued HKEX shares for the LSE.

HKEX chairman 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".

HKEX mentioned: 'The proposed mixture would strengthen each companies, higher place them to innovate throughout markets and geographies, and provide market individuals and traders unprecedented global market connectivity'.

The proposed transaction implied a value for each London Stock Exchange share of about 8,361p, based on the HK$245.20 closing price of Hong Kong Stock Exchange shares on Tuesday.

The move is just the latest in a string of takeover bids from overseas buyers aiming to take advantage of weakened sterling, which has made United Kingdom assets cheap for North American and Asian buyers.

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London Stock Exchange Group described the approach as 'unsolicited, preliminary and highly conditional'.

The Hong Kong exchange is required to make a binding offer by October 9.

'This is an initial shot, however.

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.

"The proposal is a fascinating prospect but far from a done deal", Hunter said. It may also be that the likes of the New York Stock Exchange will be looking on with interest'.