The London Stock Exchange today rejected the £32 billion takeover offer from Hong Kong Exchanges, declaring it had “fundamental concerns” about the price and the impact of the political situation in Hong Kong.
The LSE described the offer as “unsolicited” and “preliminary” and said it was worried about the “key aspects” of the conditional proposals.
In a statement, it said these concerns centred around the areas of “strategy, deliverability, form of consideration and value”. The board was unanimous in its decision and said it “sees no merit in further engagement.”
In a letter of rejection to the Hong Kong bidders, chairman Don Robert cited his board’s clear displeasure that the bidders had gone public with its offer only two days after making their first approach.
He said the company would stick with its own £22 billion plan to buy Refinitiv, the data provider. That deal is due to complete by the end of the year and was the culmination of many months’ work.
Tying up with HKEX did not fit with the LSE’s strategic objectives and would be a “backwards step,” it said. “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 position in Asia or the best listing.”
The LSE said such a deal would be subject to massive scrutiny from regulators across the world, adding that HKEX’s relationship with the Hong Kong government — the biggest shareholder — would further complicate matters. It was particularly concerned that the “ongoing situation in Hong Kong” — clearly referring to the current riots and unrest — would impact on the merged business. HKEX has declared itself a key strategic gateway into the vast Asian economies and markets, but LSE said it questioned that status.
The rejection had been expected so the LSE share price barely moved. It could trigger a higher offer, but that would still not resolve the LSE’s other problems with the tie-up, analysts said.
