The £29.6bn bid by HKEX for London Stock Exchange (LSE) has been pulled, prompting shares in the latter to fall by 6% to £69.94.
Charles Li, chief executive of HKEX, said: ‘The level of engagement from LSEG led us to conclude that the continued pursuit of a combination of the two businesses would not be in the best interests of our own shareholders.’
Shares in the Hong Kong Stock Exchange operator closed up 2.3% in Asian trading, on relief that the company didn’t raise its offer price.
Under UK takeover rules HKEX had until 9 October to make a binding offer, and today’s withdrawal means it cannot make another offer for six months unless the London Stock Exchange board reopens discussions or another suitor enters the fray.
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The initial market reaction gave early clues that the deal was a non-starter from the off, with the shares never reaching the implied offer price of £83.
The number of potential obstacles was insurmountable such as the London Stock Exchange’s ongoing $27bn purchase of Refinitive and regulatory and political scrutiny.
There was a sense among shareholders that the deal was partially motivated by HKEX’s attempt to ‘park’ assets outside of the reach of the encroaching clutches of Beijing.
Although sector consolidation will likely continue, the London Stock Exchange is focused on securing regulatory approval for its acquisition of financial data group Refinitiv and expects to close the deal in the second half of 2020, seeking shareholder approval at a meeting scheduled for next month.
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