London Stock Exchange rejects Hong Kong bid

London Stock Exchange Group plc (LSEG) on Friday rejected the recent $39 billion takeover approach from Hong Kong Exchanges and Clearing (HKEX).

The Hong Kong bid aims to scupper LSEG’s proposed $27 billion acquisition of data giant Refinitiv.

HKEX responded by saying it believes that shareholders in LSEG “should have the opportunity to analyse in detail both transactions and will continue to engage with them.”

HKEX is still seeking friendly negotiations with LSEG’s board and has not yet decided whether to take the hostile approach of making a tender offer directly to LSEG shareholders.

LSEG said in a stock exchange statement: “The board has fundamental concerns about the key aspects of the conditional proposal: strategy, deliverability, form of consideration and value.

“Accordingly, the board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no merit in further engagement …

“LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv Holdings Ltd.

“Regulatory approval processes are under way and a circular is expected to be posted to LSEG shareholders in November 2019 to seek their approval of the transaction.

“The transaction remains on track to close in H2 2020.”

Responding, HKEX said a statement: “Hong Kong Exchanges and Clearing Limited notes the statement from the Board of the London Stock Exchange Group plc.

“The board of HKEX continues to believe that the proposed combination with LSEG represents a highly compelling strategic opportunity to create a global market infrastructure leader.

“The board of HKEX had hoped to enter into a constructive dialogue with the board of LSEG to discuss in detail the merits of its proposal and are disappointed that LSEG has declined to properly engage.

“In particular, HKEX had hoped to demonstrate why it believes that the benefits of its proposal significantly outweigh those of the proposed acquisition of Refinitiv.

“As set out to LSEG, HKEX has undertaken thorough and detailed analysis ahead of making its approach to LSEG.

“In addition, HKEX has held initial constructive discussions with regulators and policy makers.

“HKEX continues to believe that its proposal is in the best interests of shareholders, customers and for global capital markets as a whole.

“HKEX believes that shareholders in LSEG should have the opportunity to analyse in detail both transactions and will continue to engage with them.”