Friday, 20 September, 2019

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

London Stock Exchange gets £32bn Hong Kong bid Hong Kong Exchanges and Clearing proposes merger with LSE
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'.