The LSE Just Made a Deal. Now Another Is on the Table.
Hong Kong’s stock exchange operator has tabled a £29.6 billion ($36.6 billion) bid to buy the London Stock Exchange Group.
Hong Kong’s stock exchange operator has made a £29.6 billion ($36.6 billion) bid to buy the London Stock Exchange Group.
Hong Kong’s stock-exchange operator has made a £29.6 billion ($36.6 billion) bid to buy the London Stock Exchange Group, just weeks after LSE agreed on a £22 billion deal to merge with financial data giant Refinitiv.
Hong Kong Exchanges and Clearing Limited (HKEX) said the Refinitiv deal would have to be scrapped as part of its offer conditions.
The back story.
LSE has a history of looking to new sources of revenue and to expand its global footprint. But it also has a long record of failing to close such deals.
Since 2000, the U.K. stock exchange operator has rejected bids from Sweden’s OMX, Australia’s Macquarie Bank and U.S. exchange Nasdaq.
An agreed deal with Canadian stock exchange TMX fell through in 2011, while European Union regulators in 2017 blocked the LSE’s £21bn merger plan with German stock exchange Deutsche Börse—the third time the two rivals have tried to do a deal.
Back in 2016, HKEX said it was keeping a close eye on Deutsche Börse’s bid for LSE, which ultimately collapsed.
The Hong Kong exchange operator bought the London Metal Exchange for £1.4 billion in 2012.
Last month, LSE agreed to buy Refinitiv for $27 billion, creating a financial data and trading powerhouse.
What’s new. HKEX said it had made a proposal to the LSE board to merge, which was an opportunity to create a “global market infrastructure leader.”
The £29.6 billion deal values the LSE at 8,361 pence per share, a 22.8% premium to last night’s closing price of 6,804 pence.
The Hong Kong exchange’s chief executive, Charles Li, said the deal would “redefine global capital markets for decades to come,” connecting East and West in the process.
LSE said it remained committed to the acquisition of Refinitiv but would consider the “unsolicited, preliminary and highly conditional” proposal and make a further announcement in due course.
Shares in LSE soared 8.5% in early trading, but have since dropped back to 7,188 pence, a 5.6% rise that leaves the stock below the offer price.
Looking ahead. The curse that keeps blocking the London Stock Exchange from completing deals has struck again.
The exchange operator’s potentially game-changing Refinitiv merger seemed like a done deal until HKEX’s unsolicited takeover bid on Wednesday.
LSE said it remained committed to the Refinitiv acquisition. Its record suggests there may be further twists in the tale.
Write to Callum Keown at Callum.Keown@dowjones.com
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