US watchdogs could scupper £32bn assault on exchange

WATCHDOGS in the US will wade in to block the Hong Kong stock exchange’s £32bn bid for the London Stock Exchange, experts believe.

Hong Kong Exchanges and Clearing faces an uphill struggle to seize control of the LSE, former boss Xavier Rolet said, warning that American officials are likely to be concerned about the influence it would give China’s Communist regime over Western finance.

The growing doubts over the deal came amid rumours that the Hong Kong firm is planning to sweeten its offer, by stumping up more cash for LSE shareholders. Its previous preliminary offer consisted of £7.2bn in cash and a 41pc stake in the combined business. But after the approach received a lukewarm reception on Wednesday, reports suggested the Hong Kong suitor was open to considering a meatier proposal.

Laura Foll of investment firm Janus Henderson, which is a shareholder in the LSE, was dismissive of the deal in its original form. She said: ‘I don’t expect this deal to go ahead for two reasons. The deal as it stands will most likely not get board recommendation, because the deal is mostly shares.

‘If you were an LSE shareholder, you would prefer to see the deal as more cash.’

Speaking on the BBC’s Today programme, Rolet said regulators in Washington would be likely to cast their magnifying glass over any formal offer which HKEX hammered out.

He told the programme: ‘I would expect the US regulators to be interested.

‘They would look overall at the governance, what would be the influence of governments.

‘These definitely would matter – you can call them political considerations, or you can describe them as pure regulatory considerations. I think it’s probably a mix of both.’

Hong Kong is embroiled in violent pro-democracy protests, prompted by fears that China’s hardline rulers are tightening their grip.