The Hong Kong Exchange made an unexpected $36.6 billion bid for London Stock Exchange, a bold move that would upend the U.K. bourse’s combination with Refinitiv, Bloomberg reported.
LSE’s board “remains committed to” the acquisition of data provider Refinitiv, highlighting the hurdles facing an offer that it called unsolicited, preliminary and highly conditional. The board said it would consider the proposal and make a further announcement later.
LSE’s shares pared earlier gains, reflecting skepticism that a deal can be done in the face of unrest in Hong Kong and potential concern over Chinese ownership. LSE executives and investors may also view the $27 billion takeover of Refinitiv, aimed as a push into financial data, as a more secure future than a multi-continental combination of stock exchange operators.
For HKEX, the bet on London remaining a post-Brexit financial hub promises a base away from the increasingly fraught political climate at home.
Under the proposal, HKEX would offer 2,045 pence as well as 2.495 newly issued HKEX shares per LSE share. That values each LSE share at 8,361 pence, the Hong Kong bourse said in its statement. The U.K. company’s stock rose 4.2% to 7,088 pence on Wednesday at 12:28 p.m. in London, after earlier surging as much as 16%.
The Asian bourse operator had considered the “ambitious and far-reaching” deal for one of Europe’s largest exchanges for many months, HKEX Chief Executive Officer Charles Li said in a statement Wednesday.
The Refinitiv deal was a bet by LSE on a future dominated by data, as the three-century-old exchange looks for ways to extend its global reach. Acquiring Refinitiv, the former financial and risk unit of Thomson Reuters, would help the London bourse expand further into data analysis, Bloomberg noted.
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.