This article was originally published on Wednesday, 11 September 2019 at 17:06 SGT; it has since been updated with more details.
Hong Kong Exchanges and Clearing, or HKEx, has made an around 29.6 billion pound (S$50.47 billion or US$36.58 billion) takeover bid for the London Stock Exchange Group in a move that would combine the largest financial centers in Europe and Asia, the Hong Kong exchange said Wednesday.
Under the deal’s terms, HKEx would pay 2,045 pence in cash and 2.495 newly issued HKEx shares for each share of LSEG, the announcement from HKEx said. That implies a value of around 8,361 pence per LSEG share, based on the closing price of HK$245.20 per HKEx share Tuesday, the statement said.
The offer represents a premium of around 22.9 percent to LSEG’s closing share price of 6,804 pence on Tuesday, HKEx said.
“We believe a combination of HKEX and LSEG represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centers in Asia and Europe,” Laura Cha, chairman of HKEx, said in the statement.
LSEG did not immediately return Shenton Wire’s emailed request for comment.
HKEx said the proposed deal would elevate the U.K.’s ability to capture growth opportunities from mainland China and from the yuan’s status as an emerging reserve currency.
In addition, “the migration of HKEX’s trading and clearing platforms to LSEG’s technology, the revenue uplift in key businesses from cross-selling and innovation opportunities and a reduction in HKEX’s capital expenditures in connection with existing systems and future investment plans all present strong synergy opportunities,” HKEx’s statement said.
The deal would be financed with a combination of existing cash resources and new credit facilities, the Hong Kong exchange said.
The takeover bid is conditional upon LSEG shareholders rejecting the proposed acquisition of Refinitiv, or that transaction being terminated by the end of the year, HKEx said. In August, LSEG offered to acquire Refinitive in an all-share deal with an enterprise value of US$27 billion.
The Hong Kong exchange said it has started talks with U.K. and Hong Kong regulators, and it looked forward to discussing it with LSEG.
HKEx said it plans to apply for a secondary listing of its shares on the London Stock Exchange, once the proposed deal is complete.