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An aerial view of London Stock Exchange, Paternoster Square
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The London Stock Exchange (LSE) on Friday rejected the Hong Kong Exchange's (HKEX) takeover bid, preferring to stick to its data acquisition and analysis project. Refinitiv.
The LSE said in a statement that it had fundamental concerns about the main aspects of the proposal.
"As a result, the board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no point in pursuing the commitment," said LSE in a statement.
LSE shares traded up 1.6% to 7,370 pence after reporting, which was little changed from previous levels.
HKEX made an offer of 29.6 billion pounds sterling ($ 36.8 billion) on Wednesday. Shareholders have welcomed it so far, although analysts expect the Asian stock market to come back with an improved proposal.
The LSE also issued a letter to HKEX President Laura Cha and Managing Director Charles Li in which she says she is "surprised and disappointed" that the Hong Kong Exchange has released her "unsolicited proposal" in two days after the communication to the LSE of his projects. .
The letter, signed by LSE President Don Robert, added that the merger of HKEX had no strategic merit and would be a "significant step backwards".
HKEX had offered £ 20.45 in cash for the transaction and 2,495 newly issued HKEX shares.
Robert added that the current political upheaval in Hong Kong could make any transaction unattractive to shareholders before noting that the price offered by HKEX was lower than the value assigned by LSE to the company.
"… Even assuming your proposal is deliverable, its value is significantly lower than an appropriate valuation for a takeover of LSEG, particularly when compared to the significant value we expect to create through our proposed acquisition. of Refinitiv, "he said.
Hao Hong, of the Communications Bank (BOCOM) International, told CNBC's "Squawk Box" channel Thursday that he expected the initial offer to be rejected, but that negotiations are continuing.
"We could expect the price to rise as the negotiations progress," he told CNBC by e-mail.
The bank's strategist added that the size of the transaction made it "potentially unaffordable", as HKEX shareholders may not be willing to support any large loan sought by the Hong Kong Stock Exchange.
-Euance Huang from CNBC contributed to this report.
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