Published: Thu, September 12, 2019
Money | By Ethel Goodwin

London Stock Exchange gets £32bn Hong Kong bid

London Stock Exchange gets £32bn Hong Kong bid

Hong Kong Exchanges and Clearing mentioned it has proposed a takeover provide for the London Inventory Trade Group in a deal price round £29.6 billion.

Shares in the London Stock Exchange Group surged by more than 15% after the offer was announced.

HKEX's surprise overture comes at a time when Britain's political scene is in turmoil over the looming Brexit deadline, which has sparked volatility in the British pound. A weakened pound has also made United Kingdom companies cheaper takeover targets.

The Hong Kong exchange has until October 9 to make a firm offer, or pull its proposal if it does not intend to make it, the statement says.

It would give US private-equity giant Blackstone Group and media company Thomson Reuters a 37-per-cent ownership stake in the combined entity and a less than 30-per-cent voting interest.

HKEX said it meant to apply for a secondary listing of its shares on the LSE once the deal has gone through.

After the announcement, LSE shares jumped 16 percent to an all-time high, but later fell back.

HKEX said in its statement that its offer is subject to LSEG shareholders voting down the deal, or LSEG dropping its bid for Refinitiv. The significant gap with HKEX's offer price reflects widespread scepticism that the bid will succeed, investors said.

In 2017, the European Union blocked an attempted merger between the LSE and Germany's Deutsche Boerse, saying a "de facto monopoly" would be created for some financial services.

The UK Treasury described the LSE as a "critically important part" of the British financial system. "It won't be easy to clear all the regulatory hurdles - the deal is super politically sensitive", he said.

Prices of bonds issued by Refinitiv were only slightly lower in secondary trading on Wednesday, implying continued investor confidence in the company's tie-up with LSE. The LSE has long sought to bolster its footprint in Asia and recently launched a link with Shanghai.

It said it expected key LSE management to keep their jobs and work for the new owners.

Britain's regulators, meanwhile, are likely to take a close look at the Hong Kong stock exchange's corporate governance.

The Hong Kong government threw its support behind the move.

"The government is glad to see HKEX's endeavor to enhance its core strength and seek worldwide expansion in accordance with its strategic plan", a spokesman said.

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