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The London Stock Exchange Group (LSE) rejected the offer of its Hong Long rival, worth 31.6 billion pounds, in a categorical rejection that described the approach as "fundamentally defective ".
The LSE said its board of directors unanimously rejected the proposed takeover of Hong Kong's Exchanges and Clearing (HKEX) and said it saw "no interest" in having discussions with the suitor.
In addition to the flaws in the proposal, the LSE also stated that the price of the stock at £ 83.61 "is significantly lower than this."
The LSE stated: "The Board has fundamental concerns about the essential aspects of the conditional proposal: strategy, deliverability, form of consideration and value.
"As a result, the board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no interest in continuing the commitment."
The shares of the LSE have increased by 3%.
This haircut comes after HKEX's Wednesday launch of its surprise public takeover bid on stocks and shares aimed at disrupting the $ 27 billion planned deal by the LSE on the Refinitiv data provider.
While shares had initially risen Wednesday to the shock announcement, they quickly reduced their gains as investors became skeptical about its chances of success.
HKEX said the proposal was contingent on the dismantling of the Refinitiv partnership.
In his letter to HKEX executives, Don Robert, president of LSE, said the board was "surprised and disappointed" that the approach was published just two days after being briefed.
He went on to explain that the proposed agreement with Refinitiv had a "strategic logic" and had so far been well received by investors, since the number of shares has increased by about 29% since the announcement of the agreement.
"On the other hand, the high geographic concentration and the high exposure to trading volumes in your company's market would represent a significant setback for LSE strategically," he added.
The LSE is also concerned about HKEX's relationship with the Hong Kong government, the largest stockholder in the stock market, with a 6% stake.
And he said that the structure of the proposed offer raised concerns, three-quarters being based on the actions of HKEX, which according to the LSE are "inherently uncertain", especially given the unrest and protests in Hong Kong.
The LSE recognizes the importance of the Chinese market and Asia, but does not believe that HKEX is the best way to achieve this, preferring instead its existing partnership with the Shanghai Stock Exchange.
Mr. Robert concluded, "Regardless of the considerations above, and even assuming that your proposal is deliverable, its value is significantly lower than an appropriate valuation for a takeover of LSEG, particularly in relation to the significant value that we plan to create through our planned acquisition of Refinitiv. "
Neil Wilson, chief market analyst at Markets.com, said it was "not surprising to see that the LSE board of directors had politely but firmly rejected the offer. of HKEX ".
He said: "Unattractive, offering a puny dowry and coming with unstable and unpredictable parents, HKEX has never seemed to be the ideal bride."
"The question now is whether the Americans offer a counter-offer."
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