The proposal made by HKEX in September 2019 was rejected by London Stock Exchange on the basis of various factors


HKEX will no longer pursue acquisition of London Stock Exchange (Credit: Hong Kong Exchanges and Clearing Limited)

Hong Kong Exchanges and Clearing (HKEX) has withdrawn its offer of nearly £32bn ($37bn) to acquire London Stock Exchange Group after failing to invoke interest in the latter’s management and shareholders.

The company, which owns the Hong Kong Stock Exchange, offered to buy all the shares of its London counterpart for £83.61 per share, made up of £20.45 in cash plus 2.495 HKEX shares. However, the takeover proposal was conditional on London Stock Exchange abandoning its previously announced $27bn acquisition of financial markets data provider Refinitiv.

LSEG declined the offer from HKEX on the basis that the latter’s proposal had fundamental concerns regarding key aspects, while adding that its board found no merit in further engagement.

The Hong Kong-based company, in a statement, said: “The Board of HKEX continues to believe that a combination of LSEG and HKEX is strategically compelling and would create a world-leading market infrastructure group.

“Despite engagement with a broad set of regulators and extensive shareholder engagement, the Board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realising this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal.”

Why LSEG rejected the offer from HKEX

The London bourse also said that the proposal did not meet its strategic objectives, had serious deliverability risk, and the share consideration from the Hong Kong group was unattractive.

Furthermore, LSEG said that the value created by the proposed transaction would be substantially short of an appropriate valuation for its takeover, particularly when compared to the value it expects to generate by acquiring Refinitiv.

The UK-based company, in a statement, said: “LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv.

“Regulatory approval processes are underway and shareholder approval for the transaction is expected to be sought at an Extraordinary General Meeting in November 2019. The transaction remains on track to close in H2 2020.”

Refinitiv is a provider of financial data and infrastructure across the world. It offers data, insight and analytics that are customised to workflows in its four key customer segments of investment and advisory, trading, wealth, and risk management.