The London Stock Exchange has turned down a $ 39 billion takeover bid from the Hong Kong Stock Exchange and has chosen to stick to the planned acquisition of Refinitive Data and Analysis Group.
The rejection comes after unsuccessful attempts to merge the London Stock Exchange and the German Stock Exchange against the backdrop of the European Commission's rejection.
The London Stock Exchange told the Hong Kong Stock Exchange and clearing company in a letter that it had fundamental concerns about key elements of the offer, and that the company's relationship with the Hong Kong government would "complicate matters," Reuters reported.
"Accordingly, the Council unanimously rejects the conditional offer and, given its fundamental shortcomings, sees no advantage in further engagement," it said in a statement. London shares rose 1.3 percent to 7,352 pence after the statement.
The Hong Kong Stock Exchange and Clearing House made its surprise offer on Wednesday, just two days after officials traveled to London to bid for the acquisition of London Stock Exchange chief executive David Schwimmer for the first time.
The Asian offer would have required the London Stock Exchange not to merge with UK-based financial and information firm Refinitiv.
The London Stock Exchange announced in early August its intention to acquire Refinitiv for $ 27 billion from Thomson Reuters and Blackstone Group.
The offer has received a lukewarm reception from shareholders so far, although analysts expect the Asian bourse to return with an improved offer and may be headed for a hostile takeover, meaning it will go directly to the shareholders on the London Stock Exchange.
In its letter, the London Stock Exchange said the Hong Kong Stock Exchange's clearing that the deal would be swift and confirmed was "simply not credible."
The London Stock Exchange and its advisers had a wide range of concerns, including the possibility of China's potential impact on the Hong Kong stock exchange, and the possibility of the deal facing formal objections from Britain and the United States, Bloomberg reported yesterday.
One of the important challenges facing the Hong Kong bourse is reportedly getting support from the British government, which has already shown some caution about the takeover by a foreign observer with close ties to China, which could pave the way for the LSE to pass to the Chinese government.
Because the offer of the Hong Kong Stock Exchange and Clearing House relies heavily on stock swaps, it will increase its exposure to the fallout from the current political turmoil in Hong Kong.
The Asian offer was also challenged by shareholders on the London Stock Exchange, with Jupiter Asset Management and Aberdeen Standard Investments saying they preferred the proposed merger between the British exchange and Refinitiv.
The Hong Kong Stock Exchange is the fourth largest financial market in the world in terms of trading volume, while the London Stock Exchange manages the largest financial market in Europe.
The German stock market has also failed to take over the London Stock Exchange three times in recent years, where it faced opposition from politicians and regulators, amid fears of monopoly.