Hong Kong Stock Exchange just proposed a $37 billion deal to buy the London Stock Exchange

Charles LiCharles Li, CEO of Hong Kong Stock ExchangeReuters

  • Hong Kong Stock Exchange on Wednesday said it is proposing to buy the London Stock Exchange, in a deal worth $36.6 billion.
  • The Hong Kong exchange has until October 9 to make a firm offer, or pull its proposal if it does not intend to make it, the statement says.
  • Together, the two stock exchanges would be worth more than $70 billion, it said. The LSE said its board will consider the proposal.
  • LSE recently agreed to pay $27 billion for data company Refinitiv, which the LSE said today it is committed to. The HKEX said that its offer will be dependent on the LSE dropping the Refinitiv purchase.
  • View Markets Insider's homepage for more stories

Hong Kong Stock Exchange says it's proposing a deal to buy the London Stock Exchange for about $36 billion.

The exchange, or HKEX, announced the plan on its website Wednesday morning, the result of what it said was "early engagement" with the London Stock Exchange. The tie-up would create an exchange giant with a combined value of more than $70 billion, it said.

"Following early engagement with LSEG, we look forward to working in detail with the LSEG Board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses," HKEX Chief Executive Charles Li said in the statement.

"We are early in the process so I can't go into too much detail at this stage, but after many months of consideration we believe we have put forward a proposal that is ambitious, far-reaching, and could have a transformative effect on global financial markets."

"The Board of LSEG will consider this Proposal and will make a further announcement in due course," LSE said in an emailed statement.

LSEG recently announced that it agreed to buy data company Refinitiv in a deal worth $27 billion. HKEX said in its statement that its offer is subject to LSEG shareholders voting down the deal, or LSEG dropping its bid for Refinitiv.

"LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv," LSEG said in a statement.

The offer, worth an estimated 8,361 pence per LSEG share, represents a premium of about 23% to LSEG's closing share price on September 10, the day before the offer was announced, HKEX said.

HKEX is offering 2,045 pence in cash and 2.495 newly issued HKEX shares for each LSEG share, valuing LSEG at about £29.6 billion ($36.59 billion).

LSEG stock surged 6.5% on the news.

HKEX has until October 9 to make a firm offer, the exchange said.

HKEX Chief Executive Charles Li said on its website that the merger "will create a world-leading global exchange that spans Asia, Europe and the United States."

He added, "Together, they would provide an unprecedented market connectivity platform for global market participants, unleashing a new generation of opportunities on the world's first truly global exchange."

Stock exchanges have been facing headwinds from alternative trading venues and new regulation. LSEG has faced a graveyard of past merger attempts - from Intercontinental Exchange and German rival Deutsche Boerse.

The LSE and the Hong Kong exchange are both in cities where political upheaval threatens their businesses. The LSEG is expected to lose out on what could have been one of its biggest prizes - the monster listing of Saudi Arabian oil giant Saudi Aramco - while Alibaba delayed its IPO in Hong Kong due to unrest in the city.

HKEX owns the London Metal Exchange.

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