After less than a week since the London Stock Exchange Group (LSEG) rebuffed the £31.6 billion ($39.4 billion) acquisition bid from Hong Kong Exchanges and Clearing (HKEX), it appears the British exchange is preparing itself for a hostile takeover
According to a report from Financial News London, which cites people familiar with the matter, LSEG has recruited two bankers from JPMorgan to join its roster of advisers – Dwayne Lysaght, the co-head of mergers and acquisitions in Europe, the Middle East, and Africa, and Edmund Byers, co-head of its UK business.
Furthermore, the bank has been named as a “defence advisor” to the LSE in regulatory filings. JPMorgan joins a list of banks that are advising the London exchange. Namely, investment banks Goldman Sachs, Morgan Stanley, and Robey Warshaw are already acting as advisors.
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As Finance Magnates reported, on Friday the LSEG released a statement, rejecting the acquisition bid from HKEX. 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.
“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.”
Despite this rejection, HKEX said that it still intends to pursue a possible deal and has started a series of meetings with shareholders to lay out its plan. If the UK exchange refuses to talk with the Hong Kong Group, it could launch a hostile bid.
Speaking to the news outlet, Colin McLean, a fund manager at SVM Asset Management, another LSE shareholder, said: “We doubt that LSE shareholders will want this deal, it looks too risky. Our preference is for the initial [Refinitiv] deal and we doubt that HKEX would get anywhere by going hostile, so [it is] unlikely they will.”