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Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival


Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival

Hong Kong’s stock exchange pulled a $36.6 billion bid for its London rival, a deal that would have united two major trading hubs even as both are clouded in political turmoil.

Less than a month after it first unveiled the surprise proposal, Hong Kong Exchanges & Clearing Ltd. said it couldn’t pursue a takeover of London Stock Exchange Group PLC without any input from LSE’s management. The target’s board had quickly rejected the approach.

The Hong Kong company had hoped a tie-up would solidify its role as a gateway for the flow of capital between mainland China and Western markets. But it said in a statement Tuesday that it was now “not in the best interests of HKEX shareholders to pursue this proposal.”

Hong Kong is reeling from months of protests over concerns about China’s encroachment on the semiautonomous city. Over the weekend, the Hong Kong’s government invoked emergency powers for the first time in half a century in an attempt to quell the unrest. When LSE rejected HKEX’s offer last month, it questioned Hong Kong’s future as a financial gateway to China.

Britain, meanwhile, is negotiating a messy divorce from the European Union.

Deal or No Deal

The London Stock Exchange has been a favorite target and an active acquiror in the deal market, though many attempts failed.

$1.55 billion

July 2001

LSE market debut



Financial Centre


Russell Investments


Hong Kong

Exchanges and


$32.1 billion

LSE Oct. 7 market cap

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In walking away from the deal, HKEX clears the way for LSE to conclude its own $14.5 billion plan to acquire financial-information and terminal company Refinitiv Holdings Ltd. from a Blackstone Group Inc.-led group. The Hong Kong group’s bid was contingent on its London rival scrapping that transaction. In a statement Tuesday, the LSE said the Refinitiv deal remains on track to close in the second half of 2020.

Two days after HKEX publicly released its proposal on Sept. 11, the LSE rejected the offer. It said the Refinitiv deal made more strategic sense and would face a less challenging regulatory review. LSE and rivals are increasingly focusing on selling financial data to help counteract the pressure on fees from stock-trading services and other more mature businesses.

HKEX had sought to create an Asian-European exchange giant offering trading, clearing, settlement, data and risk-management services spanning different asset classes, time zones and continents.

In a blog post on Tuesday, HKEX Chief Executive Charles Li said the “vision for the business looking forward is to build upon the role we already play in Hong Kong, China, Asia and more widely.” HKEX declined to make Mr. Li available for further comment.

Shares of HKEX closed 2.3% higher on Tuesday. The stock had dropped 8.2% from when the proposal was first made public through the close of trading Friday. The deal was worth $36.6 billion at announcement, and about $34.4 billion based on HKEX’s closing share price Friday and recent exchange rates. Financial markets in Hong Kong were closed for a public holiday Monday.

LSE shares dropped more than 6% after the bid was rescinded. Yet the stock remains up more than 70% for the year, with the bulk of those gains following the Refinitiv deal announcement.

Chinese acquisitions of foreign companies face growing scrutiny from the Committee on Foreign Investment in the U.S., the U.K., and other Western governments worried that Beijing could gain access to sensitive data and financial information.

HKEX had tried to address some of these concerns, noting its ownership since 2012 of the London Metal Exchange. It said the primary regulators of LSE’s trading, clearing, data and other operations would continue to oversee those businesses, and the merged group would maintain a secondary listing in London.

The Hong Kong group could have launched a formal hostile offer, taking its proposal directly to LSE shareholders. But that would have been an uphill battle without obvious support for the deal from HKEX’s own shareholders and given the market’s positive reaction to the LSE-Refinitiv tie-up.

Larry Tabb,

founder and research chairman of the financial markets research and advisory firm Tabb Group, said it wasn’t surprising that HKEX pulled the offer, particularly with the Refinitiv bid already on the table. “It would have been a herculean effort to get it across the line,” he said.

The London Stock Exchange has been involved in a string of attempted mergers and takeovers over the past two decades. It is wary of cross-border exchange deals after failing in 2011 to merge with Canada’s

TMX Group Ltd.

and then in 2017 to join forces with Germany’s

Deutsche Börse AG



Write to Steven Russolillo at and Ben Dummett at

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