Commuters walk past the London Stock Exchange in the City of London on Aug 9, 2017. The Hong Kong stock exchange says it has started talks to buy the London Stock Exchange that would value the British company at 29.6 billion pounds (US$36.6 billion). (TOLGA AKMEN / AFP)
LONDON — The Hong Kong stock exchange says it has started talks to buy the London Stock Exchange (LSE) that would value the British company at 29.6 billion pounds (US$36.6 billion).
HKEX said the deal would go ahead on condition that the merger with data analysis provider Refinitiv that the London bourse is pursuing does not proceed
The Hong Kong Exchanges and Clearing Ltd (HKEX) said Wednesday that a deal would provide the London bourse with a key opening to Asian markets and underpin the British capital's role as a financial hub.
The proposed combination represents "a highly compelling strategic opportunity to create a global market infrastructure leader," HKEX said in a statement.
The announcement comes weeks after the London bourse announced its plan to merge with financial data analysis service provider Refinitiv.
HKEX said the deal would go ahead on condition that the Refinitiv merger does not proceed.
If successful, it would mark HKEX's second overseas acquisition following its takeover of London Metal Exchange in 2012.
LSE confirmed the proposal on the same day, saying it remains "committed to and continues to make good progress on its proposed acquisition of Refinitiv Holdings".
The offer comes at a time of heightened uncertainty for London and British companies because of Brexit, which threatens to create barriers to trade for the country. A weakened pound has also made UK companies cheaper takeover targets.
The Hong Kong exchange is required to make a binding offer by Oct 9.
It is expected that key LSE management would continue to operate LSE businesses, HKEX said.
The Hong Kong approach is the latest international attempt to acquire the LSE - Germany's Deutsche Boerse has failed three times in recent years, hitting opposition from politicians and regulators. LSE CEO David Schwimmer has said that big bang takeovers in exchanges are difficult due to political concerns and in recent years the LSE has sought to diversify away from basic trading and clearing to data and analytics.
The Asian exchange, however, signalled it was confident the takeover faced no major regulatory hurdles due to little overlap in markets.
HKEX said it has already begun discussions with certain regulators in Britain and Hong Kong. "The board of HKEX believes that the two businesses are highly complementary and as such, looks forward to working with the relevant authorities to deliver a clear path to completion," it added.
HKEX said that under the terms of the deal, LSE shareholders would receive 2,045 pence in cash and 2.495 newly issued HKEX shares.
Laura Cha, chairman of HKEX, said the combination of the two exchanges represents a "highly compelling strategic opportunity".
HKEX said it intended to apply for a secondary listing of its shares on the LSE once the deal has gone through.
With inputs from agencies
HONG KONG NEWS