Economy

HKEX drops takeover bid for London peer

HKEX drops takeover bid for London peer”

Hong Kong Stock Exchange (HKEX) dropped its bid to take over its London rival, the company said in a press release.

In a statement, the board said it still believed a tie-up was "strategically compelling" and "would create a world-leading market infrastructure group".

Today's announcement follows on from a rather hostile response from LSEG regarding the takeover.

Hong Kong Exchanges and Clearing Limited (HKEX) made the shock proposal for LSEG on September 11, but LSEG formally rejected the offer the following day citing "fundamental" flaws and concerns over its ties to the city's government.

In a published letter sent to HKEX, the LSE said the bid was "inherently uncertain" because it was mostly in shares, and also because of Hong Kong's questionable future as a strategic gateway.

HKEX Chief Executive Charles Li said dropping the bid was a hard but rational decision in the interest of its shareholders, adding that there were previous cases of merger realized through other means after rejection of the initial proposal.

The failure of the bold move leaves open the question of what Li might try next to fulfill the HKEX's strategy of being "China-anchored and globally connected".

"When HKEX announced the offer, I thought they've already had discussions with London Stock Exchange and their regulators".

Observers say the Hong Kong bourse will have to come up with a new strategy to strengthen competitiveness.

Shares in the LSE plunged by over 6% in early trading after the bid withdrawal.

"The (LSE) shareholder meeting (to approve the Refinitiv purchase) has been tentatively set for November but there is no firm date".



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