The Hong Kong stock exchange has made a surprise £32bn bid approach to take over the London Stock Exchange Group.
It comes weeks after the LSE agreed a $27bn (£22bn) all-share deal to take control of Refinitiv, a move the company said would transform it into a UK-headquartered, global rival to Michael Bloomberg’s financial news and data business.
Hong Kong Exchanges and Clearing (HKEX) has tabled a proposal to the LSE board that stipulates its offer will only proceed if the deal for Refinitiv is terminated or voted down by shareholders.
Charles Li, the chief executive of HKEX, said that the proposal is a “vote of confidence” in London as the UK faces leaving the European Union.
“The UK is a global financial centre and the city of London is always going to be strong, even post-Europe,” he said. “We see no reason why the temporary difficulties and challenges should be an obstacle.”
When the Refinitiv deal was announced, David Schwimmer, chief executive of the LSE, said it would allow it to expand into Asia and emerging markets.
HKEX, whose largest shareholder is the Hong Kong government, said its move to thwart that deal would instead drive its own ambitions to “reinforce Hong Kong’s position as the key connection between Mainland China, Asia and the rest of the world”.
Laura Cha, the chair of HKEX, said: “We believe a combination represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe.
“Following early engagement with LSEG, we look forward to working in detail with the LSEG Board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses.”
Shares in the LSE initially jumped 16% but later fell back to £71.62, a rise of just over 5%. The cash and share deal would result in the LSE, whose key management HKEX has said it will retain, controlling about 41% of the combined company.
The LSE said it would consider HKEX’s approach, noting it was “unsolicited, preliminary and highly conditional. The board of LSEG will consider this proposal and will make a further announcement in due course.”
The company also said it intends to press on with its deal to buy Refinitiv, whose Eikon terminals on trading floors challenge those provided by Bloomberg.
“LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv,” the company said. “A circular is expected to be posted to LSEG shareholders in November to seek their approval of the transaction.”
If the deal with Refinitiv falls through LSE will have to pay a break fee of £198m. Refinitiv is owned by a consortium led by Blackstone and including Thomson Reuters, which owns the Reuters news service.
In 2012, HKEX paid £1.4bn to buy the then 135-year-old London Metal Exchange, the centre for global metals trading, in a deal that transformed the group into a global player.