LSEG Rebuffs HKEX, Rejects Acquisition Offer

The exchange group said the £32 billion offer was too low

The London Stock Exchange Group released a statement on Friday afternoon rejecting a £32 billion acquisition offer from Hong Kong Exchanges and Clearing Limited.

In its statement, the LSEG said that its board had concerns about the amount of money offered by HKEX, the strategy proposed by the Hong Kong firm and its deliverability.

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The London-based exchange group went into some detail as to why it had rejected HKEX’s proposal.

“We do not see strategic merit for LSEG in your proposed transaction,” wrote the exchange group in a letter to HKEX’s CEO.

“We recognise the scale of the opportunity in China and value greatly our relationships there. However, we do not believe HKEX provides us with the best long-term positioning in Asia or the best listing / trading platform for China.”

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Never going to happen

Alongside its strategic concerns, the exchange group also said that it believed HKEX was severely undervaluing the company.

“[E]ven assuming your proposal were deliverable, its value falls substantially short of an appropriate valuation for a takeover of LSEG,” said the group, “especially when compared to the significant value we expect to create through our planned acquisition of Refinitiv.”

News of the rejection didn’t come as much of a surprise to the financial services industry.

Neil Wilson, the chief market analyst at Markets.com, wrote on Wednesday that the deal was likely to fall through. And the broker executive outlined why HKEX’s bid was unlikely to succeed again on Friday.

“Unattractive, offering a puny dowry and coming with volatile and unpredictable parents, HKEX never looked like the ideal bride,” said Wilson. “No great surprise to see the LSEG board has politely but firmly rejected the HKEX bid.”

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