HKEX Is ‘Disappointed’ by LSE Rejection But Will Keep Pursuing Merger

XU WEI

(Yicai Global) Sept. 16 — The Hong Kong Stock Exchange plans to continue its pursuit of a merger with the London Stock Exchange Group despite the British bourse’s flat-out refusal of its takeover bid.

“The board of HKEX had hoped to enter into a constructive dialogue with the board of LSEG to discuss in detail the merits of its proposal and are disappointed that LSEG has declined to properly engage,” the HKEX said in a statement on Sept. 13. The proposal is “in the best interests of shareholders, customers and for global capital markets as a whole,” and shareholders should “have the opportunity to analyze in detail both transactions and [the HKEX] will continue to engage with them,” it added.

The LSE said earlier that day that the GBP31.9 billion (USD40 billion) offer merited no further engagement and that the board was unanimously rejecting the deal for four primary reasons: It did not match strategic objectives; there were serious risks concerning deliverability; the HKEX’s stock considerations were unattractive; and the valuation was “substantially” below par.

The offer also dictated that the LSE must scrap its acquisition of financial data provider Refinitiv, which the group believes would add greater value than a merger with the HKEX.

The Hong Kong exchange revealed on Sept. 11 that it planned to use cash and newly issued shares to fund the deal, which priced the LSEG some 22.9 percent higher than its market capitalization the previous trading day.

The HKEX’s board still believes “the proposed combination with LSEG represents a highly compelling strategic opportunity to create a global market infrastructure leader,” it said in its Sept. 13 statement.

Editor: James Boynton