The Hong Kong Stock Exchange has formally ended the pursuit of the London Stock Exchange after the purchase offer teetered on the brink ever since it was made last month. HKEX said on Tuesday it isn't going ahead with the US$39 billion (S$54 billion) unsolicited takeover bid for the LSE, citing complicated regulatory and technical hurdles.
The unsolicited offer from HKEK hadn't received support at the LSE board and investors. The LSE's rejection of the offer last month was based partly on complications ranging from political unrest in Hong Kong as well. LSE investors also favoured going ahead with the US$27 billion deal to buy data provider Refinitiv instead. The Hong Kong Exchange offer for LSE depended on the London exchange walking away from Refinitiv deal.
In the morning trade on Tuesday, HKEX rose 1.6 percent to HK$229.60.
Delving into the reasons for the withdrawal of the offer, the HKEK board said in an exchange filing that it's disappointed that it has been "unable to engage with the management of LSEG in realizing this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal."
HKEX executives, who were going ahead with the plan to raise £8 billion to fund the LSE purchase, had met shareholders in London and New York last month to gain support but were rebuffed.
Move for sweetened offer fails
According to a Bloomberg report, HKEX chief executive Charles Li pitched positioning HKEK at the centre of trading between East and West. However, his LSE counterpart David Schwimmer reportedly said LSE liked direct access to China.
"The complicated regulatory, technical and technological landscape in which we operate means we are resolutely focused on our ambitions, whilst also maintaining flexibility in our approach ... We are honest with ourselves too - as we know some things we try will not develop at the speed which we would like, or in some cases, at all. Our goal is to keep moving forward, reinforcing HKEX's role and building Hong Kong's strength as a financial market," Li said in a blog post on Tuesday.
After the London bourse operator rejected offer in September 13 and rebuked the HKEK board over strategy points, the Hong Kong bourse had tried to make a sweetened offer. Reuters had reported that some LSE shareholders had asked HKEK to raise the offer by 20 percent.
However, in the latest about face, HKEK decided to withdraw the offer and relinquish rights to make a fresh offer within six months.