The Hong Kong Exchanges and Clearing (HKEX) made an offer to the London Stock Exchange (LSE) to
at a valuation of £31.6bn.
The LSE’s board, assisted by its financial and legal advisors, has decided to reject the offer due to fundamental flaws within the proposal and won't continue any further engagement.
Within HKEX’s bid, the exchange proposed the LSE’s acquisition of data company Refinitiv could not complete if it was to accept the offer from the HKEX.
The LSE has said it is committed to make further progress with the proposed acquisition of Refinitiv which is on track to close in H2 2020.
The LSE declined the offer via a letter by the LSE’s chairman Don Robert. The letter said the LSE was “surprised and disappointed” the HKEX decided to publish the unsolicited proposal so soon after sending the offer to the exchange.
There were several factors which contributed to the rejection such as the potential scrutiny from financial regulators the LSE would face if it was to accept.
Another factor was three-quarters of the payment would be in HKEX shares. With ongoing political events within Hong Kong left the HKEX’s share consideration inherently uncertain and the LSE is confident it will gain significant value acquiring Refinitiv. Therefore, the LSE believed the valuation made by the HKEX “falls substantially short”.
In response to the LSE's rejection, the HKEX has also released a statement saying it is "disappointed that LSEG has declined to properly engage". Furthermore, it believes that the benefits of its proposal to buy the LSE significantly outweigh those of the proposed acquisition of Refinitiv.
HKEX believes that shareholders in LSEG should have the opportunity to analyse in detail both transactions and will continue to engage with them.