Hong Kong Exchanges bids $39 billion to take over London Stock Exchange

Hong Kong stock exchange

Hong Kong Exchanges and Clearing said it has proposed a cash-and-shares deal which would see it pay around £8.36 a share for LSE Group.

Hong Kong Stock Exchange says it's proposing a deal to buy the London Stock Exchange for about $36 billion.

This values it at £29.6billion, but the total bid would come to £31.6 billion including the LSE's debt.

"The board of HKEX believes a proposed combination with LSEG represents a highly compelling strategic opportunity to create a global market infrastructure leader", the Hong Kong exchange said in a statement on Wednesday.

It claims the combined duo is going to empower both companies and establish a better position for them by providing investors and participants unprecedented global market connectivity.

"The board of LSEG will consider this proposal and will make a further announcement in due course", it said.

Investors seemed sceptical, with LSE's shares rising 5.6% to 7,182p in late morning on Wednesday, well off HKEX's offer price.

Together, the two stock exchanges would be worth more than $70 billion, it said.

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HKEX's publication of its offer caught the London Stock Exchange off-guard.

For HKEX, the deal promises a base away from the increasingly fraught political climate at home.

However, HKEX added that a condition of the offer would be LSE shareholders rejecting plans for a US$27bn all-share merger with Refinitiv, which was originally announced in July, before the end of the year.

The "ambitious and far-reaching" deal was considered for several months according to a statement by the stock exchange's CEO Charles Li.

LSEG stock surged 6.5% on the news.

The Hong Kong group added that it expects existing LSEG managment to stay in place if the two companies reach an agreement.

The proposed takeover of the LSE comes at a time when Hong Kong is beset by political upheaval.

Meanwhile, analysts over at Bank of America Merrill Lynch were also sceptical, saying the offer price was below their price objective for the LSE and that given the "regulatory complexity" they preferred the Refinitiv merger.

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