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08 October 2019

HKEX drops LSE takeover bid, turns focus back to Asia markets

Under UK takeover rules, the Hong Kong bourse has until 9 October 2019 to make a formal offer or walk away for at least six months.


Hong Kong Exchanges & Clearing (HKEX) said that it will not proceed with its GBP 29.6 billion ($36.4 billion) unsolicited takeover bid for London Stock Exchange Group (LSEG) another failed cross-border deal in the exchange sector that ends the Asian bourse’s ambitions to be a link between Europe and China, reported Bloomberg.

The decision is a rare setback for HKEX Chief Executive Officer Charles Li, who had a vision of London at the centre of trading between East and West—with the help of Hong Kong.

In a filing, HKEX stated that while the bourse’s board continues to see a combination as strategically compelling, it’s 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.

Li’s LSE counterpart, David Schwimmer, has said he preferred direct access to China and did not need the former British colony as a conduit. LSE last month rejected HKEX’s initial takeover proposal, citing complications ranging from political unrest in Hong Kong to potential problems with regulators.

LSE investors are due to vote on the exchange’s own $27 billion deal for data provider Refinitiv before the end of the year. Any further pursuit by HKEX would depend on LSE abandoning that plan.

Exchange companies have tried and failed to combine in recent years, as political, regulatory and economic considerations have foiled the efforts. LSE’s attempted merger with Germany’s Deutsche Boerse was ultimately abandoned, and Singapore Exchange’s bid for ASX was rejected by Australian regulators in 2011 because of national interest concerns.





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