To no one’s surprise, Hong Kong Exchanges and Clearing (HKEX) pulled the plug on its audacious £32bn bid for the London Stock Exchange (LSE) this week, after HKEX chief executive Charles Li failed in his attempts to engage the board of the FTSE 100 group.
Predictably, shares in LSE dropped on the news, as speculative investors’ hopes for an £83 a share cash-and-shares payday were dashed. They subsequently rebounded, after the LSE said it had made further progress with its $27bn (£22bn) proposed acquisition of financial data provider Refinitiv. Shareholder approval for the deal will be held at a special meeting in November, ahead of a planned completion in the second half of 2020.
That transaction initially appeared under threat last month, when HKEX urged LSE shareholders to instead back its debt-funded tie-up proposal, which Mr Li described in a blog post this week as “compelling and [which] would create a world-leading market infrastructure group”. However, he conceded that radio silence from Paternoster Square following its initial rejection of the deal had forced it to back down.
Discussions with LSE shareholders and the roll-call of regulators around the world who would need to clear the deal were reportedly extensive, although HKEX did not say whether those talks were supportive. The bid was widely dismissed by analysts, who pointed to regulatory hurdles, political turmoil in Hong Kong, the deal’s structure and 23 per cent premium as major drawbacks for investors in the UK bourse.
Mr Li now joins a growing list of would-be acquirers of the City institution, following attempts by Nasdaq, Intercontinental Exchange, Macquarie Bank and Deutsche Börse.
