London Stock Exchange locked in new bid battle

Shock £32bn offer from Hong Kong rival set to be rejected

INVESTORS in the London Stock Exchange (LSE) hope a bidding war will erupt after its Hong Kong rival launched a £32bn takeover bid.

In a shock announcement, Hong Kong Exchanges and Clearing (HKEX) said it wanted to buy the 448-year- old British institution and create a ‘global market infrastructure leader’.

But it is thought that the LSE will reject the offer and instead press ahead with its own £22bn takeover of data firm Refinitiv, which is best known among City professionals for its trading terminal screens.

The surprise offer from Hong Kong has set the City alight with the possibility of other bidders moving in.

Analysts speculated that the Intercontinental Exchange (ICE), which owns the New York Stock Exchange, and Chicago-based CME Group could be in the picture.

HKEX is just the latest foreign predator to try to take control of the LSE, known as one of the three pillars of the City along with the Bank of England and Lloyd’s of London.

HKEX, partly owned by the Hong Kong government, said its bid can only go ahead if the Refinitiv takeover falls through.

Boss Charles Li likened the two firms to ‘a corporate Romeo and Juliet’, admitting that his exchange was late to approach the LSE, which was now ‘engaged with another person’.

He said: ‘We are a global company with global aspirations. This is a compelling transaction for the UK, the City of London, Hong Kong, for everybody.’

Shareholders must now choose whether to back the Refinitiv takeover or cash in and hand ownership to Hong Kong.

One major shareholder in both exchanges has told the Mail they would rather stick with the Refinitiv deal, and wait either for HKEX to up its offer or for another rival to swoop in.

Another told the Financial Times: ‘Shareholders won’t be rushed to make a decision as we like the Refinitiv deal.

‘If this is an opening gambit and they go 10pc higher, then it will be a case of what might happen in the short term to the LSE share price versus a five-year view on where the share price can go on a successful Refinitiv integration.’

LSE branded the proposal ‘unsolicited, preliminary and highly conditional’ and said it was still backing its deal with Refinitiv.

Richard Hunter, head of markets at Interactive Investor, said: ‘LSE is all-in on the Refinitiv deal so why would they pull out now for such a gamble?

‘It doesn’t make sense. The question now is whether this approach forces others to join the party and spark a bidding war.’

Analysts at Berenberg highlighted New York-based ICE and Chicago’s CME Group as potential bidders.

LSE shares closed up a moderate 5.9pc, or 402p, to 7206p having jumped 16pc earlier in the day.

It has a long history of rebuffing undesired suitors, having turned down one every 2.5 years since it listed in 2000.

Germany’s Deutsche Boerse has attempted to merge with the LSE three times in 20 years.

LSE shares have rocketed 856.2pc over the past decade, and it now has a market value of £25.2bn.

With worries mounting over China’s influence in Hong Kong, there are fears a deal could allow the Asian superpower to infiltrate London’s markets.

Neil Wilson, of Markets.com, said: ‘Effectively it would hand the LSE over to the Chinese through the Hong Kong back door.’

UK Business Secretary Andrea Leadsom said the Government would ‘look very carefully at anything that had security implications for the UK’.