Hong Kong rival offers to buy London Stock Exchange for £31.6 billion

Hong Kong Exchanges and Clearing has launched a £29.6 billion proposed takeover bid for the London Stock Exchange Group Credit: PA

A £31.6 billion takeover bid has been made for the London Stock Exchange by its Hong Kong rival.

Hong Kong Exchanges and Clearing is proposing to pay around £8.36 a share – which values the London Stock Exchange (LSE) at around £29.6 billion, or £31.6 billion including debt.

Shares in the LSE surged 10% higher after its Hong Kong rival revealed the cash-and-shares approach, but have now dropped back to 6%

Hong Kong Exchanges and Clearing (HKEX) said the tie-up would create a “global market infrastructure leader”.

HKEX has already acquired London Metal Exchange for £1.4bn, which they took over in 2012.

Shares in the LSE surged 10% higher after its Hong Kong rival revealed the proposal. Credit: PA

HKEX’s chief executive Charles Li said: "LSEG and HKEX operate some of the most significant financial infrastructure in two of the world’s most important financial markets.

"Together, they will create a world-leading global exchange that spans Asia, Europe and the United States with a market value of more than US$70 billion.

"They would provide an unprecedented market connectivity platform for global market participants, unleashing a new generation of opportunities on the world’s first truly global exchange."

Charlies Li, Hong Kong Exchage's CEO. Credit: HKEX website

Mr Li added the deal could potentially offer a gateway into ties with China, which could be particularly important in a post-Brexit world.

"This is a net benefit for Hong Kong, Mainland China, and the United Kingdom," he said.

"Hong Kong’s status as an international financial centre would be taken to another level, reinforcing the city’s importance to Mainland China and the global community and giving new energy and optimism to its role as a link between East and West.

"The transaction is also a vote of confidence in London and the United Kingdom’s future role as a global financial centre."

The Royal Exchange in City of London. Credit: PA

Business Secretary Andrea Leadsom told Bloomberg that authorities would “look very carefully at anything that had security implications for the UK".

LSE released a statement in response to the proposal, and labelled it "unsolicited", but have not outright rejected the offer.

"The Board of London Stock Exchange Group plc (“LSEG”) notes the announcement from Hong Kong Exchanges and Clearing Limited (“HKEX”) and confirms that HKEX has made an unsolicited, preliminary and highly conditional proposal to acquire the entire share capital of LSEG (the “Proposal”)," they said.

"The Board of LSEG will consider this Proposal and will make a further announcement in due course."

They also stated they intend to focus on their their takeover of US financial powerhouse Refinitiv, which they acquired earlier this year.

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

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