Hong Kong Exchanges proposes US$39b London Stock Exchange takeover

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Hong Kong Exchanges and Clearing Limited (HKEX) said on Wednesday it has made a proposal to the Board of London Stock Exchange Group Plc (LSEG) to combine the two companies.

The Refinitiv deal was a bet by LSE on a future dominated by data, as the three-century-old exchange looks for ways to extend its global reach.

Shares in LSE, which were trading more than 17 percent higher in reaction to the news at 0834 GMT, were trading 4.5 percent higher at 1010 GMT.

The deal would "redefine global capital markets for decades to come", said Charles Li, chief executive of the Hong Kong company.

Hong Kong Exchanges already has a base in London as owner of the London Metal Exchange.

The proposed transaction values the LSEG at about 29.6 billion pounds (36.6 billion US dollars), according to a statement by the HKEX.

The Hong Kong Stock Exchange has bid nearly £32 billion for its London rival in a shock move Wednesday to bring together two of the world's largest financial hubs in Asia and Europe.

In response to HKEX's announcement, the LSE said it was committed to and continued to make good progress on its proposed acquisition of Refinitiv.

Meanwhile, analysts over at Bank of America Merrill Lynch were also sceptical, saying the offer price was below their price objective for the LSE and that given the "regulatory complexity" they preferred the Refinitiv merger.

HKEX said that under the terms of the deal, LSE shareholders would receive 2,045 pence in cash and 2.495 newly issued HKEX shares.

The Hong Kong government threw its support behind the takeover bid.

As well as its iconic stock exchange, LSE runs businesses including the world's biggest OTC derivatives clearinghouse, LCH Ltd.; index provider FTSE Russell; a European share trading venue called Turquoise; and Borsa Italia.

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