Hong Kong Exchanges and Clearing has launched a shock £31.6 billion bid for the London Stock Exchange Group in a move set to disrupt its UK rival’s tie-up with Refinitiv.
Shares in the London Stock Exchange (LSE) surged as much as 16% higher after the Hong Kong exchange revealed the cash-and-shares approach.
Hong Kong Exchanges and Clearing (HKEX) is proposing to pay around £83.61 a share – which values the LSE at about £29.6 billion, or £31.6 billion including debt.
But HKEX said the potential offer is dependent on LSE’s planned 27 billion US dollars (£21.9 billion) deal to buy data provider Refinitiv being scrapped.
The LSE agreed the Refinitiv deal last month, which would see major Refinitiv shareholders, including Blackstone and Thomson Reuters, take a 37% stake in the enlarged company.
HKEX said its merger with the LSE would “redefine global capital markets for decades to come”.
It said it has had “early engagement” with the LSE and plans to seek a recommendation from its board.
But the LSE branded HKEX’s proposal “unsolicited, preliminary and highly conditional”.
It added that it would consider the approach, though it stressed it “remains committed to and continues to make good progress on its proposed acquisition of Refinitiv”.
HKEX’s proposed offer price marks a 23% premium on LSE’s closing share price on Tuesday.
It believes the deal with the LSE would strengthen both businesses, give them better geographical reach and offer market participants and investors “unprecedented global market connectivity”.
HKEX chief executive Charles Li said: “Bringing HKEX and LSEG together will redefine global capital markets for decades to come.
“Both businesses have great brands, financial strength and proven growth track records.
“Together, we will connect East and West, be more diversified and we will be able to offer customers greater innovation, risk management and trading opportunities.”
The approach for the LSE comes after an attempted £21 billion merger with German rival Deustche Borse collapsed in 2017, when it was blocked by the European Commission.