HKEX unveils surprise £32bn bid for the London Stock Exchange Group

The company that owns Hong Kong’s main stock exchange has made a £32bn bid to buy its rival in London – the London Stock Exchange.

Shares in the London Stock Exchange Group initially gained more than 15% on news of the offer, but fell back later.

In announcing the bid, Hong Kong Exchanges and Clearing said that combining the two exchanges would bring together ‘the largest and most significant financial centres in Asia and Europe’.

Charles Li, chief executive of the Hong Kong company said that the deal would ‘redefine global capital markets for decades to come’, adding, ‘together, we will connect East and West, be more diversified and we will be able to offer customers greater innovation, risk management and trading opportunities’.

The LSE confirmed it had received an “unsolicited, preliminary and highly conditional” offer from its Hong Kong rival and said it would make an announcement in “due course”.

‘Non-starter’

However, analyst Neil Wilson, from Markets.com, described the proposed deal to the BBC as a ‘non-starter’.

He said that the LSE’s share price after the announcement – just more than £71 and well below the £83.61 offer price – is a sign that investors don’t expect the deal to get over the line, saying that political considerations would be ‘front and centre’.

‘The UK government may not wish to see such a vital symbol of UK financial services strength, and indeed a strategic asset, to be owned by foreigners,’ he said. ‘Effectively it would hand it over to the Chinese through the Hong Kong back door.’

One of the prerequisites of the offer from Hong Kong is that the LSE would have to scrap its proposed £22bn deal to buy data firm Refinitiv.

Its current owners include Thomson Reuters and private equity house Blackstone, and in its statement, the LSE said it ‘remains committed to and continues to make good progress’ with the deal.

In 2017, the European Commission blocked a proposed £21bn merger between the LSE and Germany’s Deutsche Boerse, saying that the deal would have created a ‘de facto monopoly’ for certain financial services.