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Most optimistic offer:
Hong Kong Exchanges &
Clearing & London Stock
O
ut of seemingly nowhere in
mid-September came what
could rightly be considered the
most audacious acquisition offer of
the year. Not only had Hong Kong
Exchanges & Clearing (HKEX)
offered £20.45 a share in cash and
2.495 newly issued HKEX shares
– representing a total valuation
of £32 billion, far in excess of the
fee mooted during the discussions
between LSEG and Deutsche Borse
three years ago.
But the valuation involved wasn’t
the only issue LSEG had with it
described as an unsolicited offer;
HKEX publically announced the
bid just two days after its submis-
sion, LSEG cited a host of complex-
ities that would arise should the
offer be taken seriously. Top of the
list was HKEX’s stipulation that
should its offer be accepted, LSEG
would have to terminate its own ac-
quisition plans for data giant, Ref-
initiv. The Chinese exchange group
stated that it too had grand plans
for future technology and data de-
velopment, primarily a new digital
trading platform. The UK exchange
reiterated its commitment to the
Refinitiv deal in its response as
well as a preference to continue to
focus on its direct connections to
China through the Shanghai Stock
Exchange, with which it operates
the Stock Connect initiative, which
went live in June.
Undeterred, HKEX chief execu-
tive, Charles Li, kept up the offen-
sive and said that LSEG sharehold-
ers should have the opportunity to
analyse, in detail, both its offer for
LSEG and the Refinitiv transac-
tion. By signalling intent to engage
directly with LSEG shareholders,
rather than the board, the tension
between both sides ratcheted up a
notch – a fact which was evident
when both Li and LSEG chief
executive, David Schwimmer, gave
back-to-back keynotes on the same
morning during this year’s Sibos
conference.
At the time of writing there had
been no follow-up approach by
HKEX, although given its apparent
appetite for the acquisition this
seems like a matter of time, the
chances of it actually happening
look remote. While the rest of the
UK is mired in the Brexit saga,
LSEG has continued to perform
well across its different business
lines and is betting big on data, an
element that the asset management
community is investing heavily
in. Unless HKEX increases the
pressure and takes the route of a
hostile takeover, a strategy that
should cause alarm bells to ring at
numerous regulatory bodies, it’s
hard to see LSEG accepting even a
vastly improved offer.
Issue 61 // TheTradeNews.com // 73