Hong Kong Stock Exchange Pulls Bid For London Counterpart

Hong Kong Stock Exchange Pulls Bid For London Counterpart

Hong Kong's bourse said on Tuesday it has dropped its $39 billion bid to take over London Stock Exchange Group (LSE), saying it had been unable to bring the takeover target's management on board with its unsolicited approach.

HKEX chief executive Charles Li wrote in a blog post: "We still believe the strategic rationale for the combination of our two businesses is compelling and would create a world-leading market infrastructure group".

The HKEX initially made a30 billion ($37 billion) bid for the LSE in September. The Hong Kong exchange had said the LSE would have to ditch the Refinitiv purchase for its offer to go ahead.

The London Stock Exchange turned down the whopping $36 billion bid, citing accusations that the Hong Kong exchange is tied to the government.

HKEX said in a statement Tuesday that it was "disappointed" to pull its bid but that it was in the best interests of shareholders to do so.

LSEG shares slid to stand down 5.2 percent to £70.60 in London afternoon trading. Refinitiv is 45 per cent-owned by Thomson Reuters which owns Reuters News. Political turmoil engulfing Hong Kong and perceptions of Beijing's growing influence over the city, were seen as another key obstacle to any deal.

He added: "We are honest with ourselves too - as we know some things we try will not develop at the speed which we would like or, in some cases, at all".

Since the HKEX unveiled its takeover offer last month, LSEG stock has held stubbornly below the bid level - which stood at more than £83 per share - as investors remained unconvinced.

HKEX already owns the London Metal Exchange, which it purchased in 2012 for £1.4bn, but has so far failed to turn it into a bridge between the west and China. "It may not be a stock exchange, but other related areas", said Bocom's Hong.

Approval will be sought from shareholders for the Refinitiv deal in a vote in November, with LSE aiming to complete the deal in the first half of next year.

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