In a potential mega-merger Hong Kong Exchanges and Clearing has made a shock approach for London Stock Exchange (LSE).
The bid on the table is worth £31.6bn and shares in the LSE jumped nearly 10% to £74.70 on the news.
‘Bringing HKEX and LSEG together will redefine global capital markets for decades to come,’ says HKEX chief executive Charles Li. ‘Both businesses have great brands, financial strength and proven growth track records.’
The mooted deal reflects the attractiveness of unique UK assets like the London Stock Exchange amid the Brexit-inspired weakness in sterling.
In August the company agreed to buy financial information provider Refinitiv in a $27bn deal in an attempt to rival the likes of Bloomberg.
A previous attempt to merge with the Deutsche Boerse in 2017 failed amid a veto by European regulators and there may well be regulatory obstacles to this latest proposed tie-up.
We wrote last September that the LSE’s new chief executive David Schwimmer was likely to seek a large acquisition for the company. The article also suggested that it could be a takeover target for CME.
TERMS OF THE DEAL
HKEX has offers £20.45 cash and 2.495 new HKEX shares for every LSE share.
The deal values LSE at £83.61 per share which is a 22.9% premium to last night’s closing price.
It is also a near-50% premium to the price before LSE announced its intended acquisition of financial data group Refinitiv.
The deal is currently structured as a proposal and HKEX has until 5pm on 9 October to make a formal offer.