Hong Kong / London (AP) - The largest stock exchanges in Asia and Europe may be starting a mega-merger. The Hong Kong Stock Exchange surprisingly approached its counterpart in London on Wednesday with a takeover bid.
The offer would the London Stock Exchange (LSE) with 29.6 billion British pounds without debt (about 33 billion euros) rate, the Hong Kong stock market operator HKEX announced on Wednesday. The LSE said it wanted to check the plans. The Hong Kong Stock Exchange called it "unsolicited and provisional."
A merger would not only create a leading global financial services company, but also strengthen both businesses, HKEX said. The transaction also promised high synergies. For example, HKEX aims to integrate its trading platforms into the London system. A transaction would be in the interest of all shareholders, said the operator.
HKEX had already bought the London Metal Exchange in 2012 for £ 1.4 billion. The LSE was also already the focus of merger projects: a merger with Deutsche Börse failed a few years ago at the veto of the European Commission.
The offer of a cash payment and newly issued HKEX shares corresponds to a premium of almost 23 percent on the last stock market price of the LSE, according to the Hong Kong Stock Exchange. HKEX is seeking a merger agreement - but reserves the right to make a takeover offer. Details will be discussed with the management of LSE. HKEX took a long-term view of the Hong Kong and London Stock Exchanges and plans to re-stock its shares in the British capital. The LSE share has since risen by more than 15 percent.
The push comes at a time when the London Stock Exchange itself is facing a major purchase: The LSE wants to take over the data provider Refinitiv with a corporate value of 27 billion US dollars. The Hong Kong Stock Exchange said that its offer was dependent on the cancellation of the refinance takeover. The LSE wants to stick to its plans; she comes along well, according to own data.
Ronald Wan, head of investment advisor Partners Capital International in Hong Kong, sees major challenges in the deal - especially political ones. Hong Kong is a special administrative region of China. A takeover of LSE by HKEX could also be seen as a takeover by China. A transaction is politically "super sensitive".
British Economy Minister Andrea Leadsom said on Bloomberg TV that the government would look closely at any merger between exchanges. Above all, one would look very closely at anything that could have security implications for Britain.