The Board of Executives of the London Stock Exchange Group (LSEG), that controls the London Stock Exchange, took an unanimous decision to refuse to merge with Hong Kong Exchanges & Clearing Ltd, HKEX, the biggest Hong Kong exchange. One of the reasons for refusal is the current unstable situation in Hong Kong.
The LSEG Board of Directors noted the fundamental differences in such key aspects as the financial institution’s strategy, the efficiency level, the price aspect, and methods of financial products evaluation. Currently, LSEG is ready to make a deal on purchasing Refinitiv Holdings Ltd, the second biggest financial data provider. The deal is expected to be finalized in the second half of 2020.
On September 11, the Hong Kong exchange offered LSE shareholders 20.45 pounds and 2.495 of newly-issued HKEx shares in exchange for every share that they own. The total value of this deal was estimated at 29.6 billion pounds (36.6 billion US dollars).
According to experts’ estimates, the HKEx shares are rather volatile this year. On September 12, the shares fell by 3.5% after the exchange had announced intentions to buy LSEG, and the day after that the price rose by 1.4%.
The British government supported a refusal of the London Exchange to merge with the Hong Kong Exchange. The Bank of England representatives who are advisors of the Treasury see the LSE as an essential element of the UK financial market. In connection with that, any approval of a possible LSE merger may fail to pass the state audit for financial stability and security. To finalize a deal of this level, HKEX will need a permission from US regulatory authorities, experts emphasized.
