Hong Kong in $39bn offer for London Stock Exchange

Hong Kong Exchanges and Clearing (HKEX) made a surprise $39 billion takeover approach for the London Stock Exchange (LSE) on Wednesday.

The approach aims to scupper the LSE’s proposed $27 billion acquisition of data giant Refinitiv and create a global trading powerhouse.

The unsolicited proposal is contingent on the LSE ditching its Refinitiv deal.

“The board of HKEX believes a proposed combination with LSEG represents a highly compelling strategic opportunity to create a global market infrastructure leader,” the Hong Kong exchange said in a statement. 

The LSE said it would review the proposal but added that it was committed to its planned all-share acquisition of Refinitiv from a consortium led by US private equity firm Blackstone.

HKEX, whose main shareholder is the Hong Kong government, said its £31.6 billion cash-and-share transaction proposal represented a 22.9% premium to the LSE’s closing stock price on Tuesday. 

Guy de Blonay, a fund manager at Jupiter, a leading shareholder in the LSE, told Reuters: “It looks uncertain whether shareholders will accept the offer, given that the Refinitiv deal is popular across the shareholder base for its potential to transform the business and add value over the long-term.”

LSE said in a statement: “The board of London Stock Exchange Group plc notes the announcement from Hong Kong Exchanges and Clearing Limited and confirms that HKEX has made an unsolicited, preliminary and highly conditional proposal to acquire the entire share capital of LSEG …

“The board of LSEG will consider this proposal and will make a further announcement in due course.

“LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv Holdings Ltd as announced on 1 August 2019. 

“A circular is expected to be posted to LSEG shareholders in November 2019 to seek their approval of the transaction.”

Under the terms of the proposed transaction LSE shareholders would receive 2,045p in cash and 2.495 newly issued HKEX shares for every LSEG share.