Hong Kong exchange unveils shock $39.5B bid for London rival
CLMV economic development framework agreed
THE CLMV (Cambodia, Lao, Myanmar and Vietnam) countries have agreed on a framework for economic development, which will be submitted to CLMV’s leaders to approve next year, the Ministry of Commerce announced on Wednesday.
The announcement was made following the 11th CLMV Economic Ministers’ Meeting during the 51st Meeting of the Asean Economic Ministers which was held on September 5-8 in Bangkok.
The framework for CLMV development will be submitted to the countries’ leaders to approve at the 10th CLMV Summit, which is set to be held next year in Laos.
The development framework focuses on three elements, including connectivity to facilitate trade investment and cooperation, measures to attract skilled workers and investment in the sectors with comparative advantages – mainly agriculture, food and tourism.
The CLMV economic ministers’ meeting, which was chaired by Cambodia and led by Minister of Commerce Pan Sorasak, was attended by economic ministers and delegations from the CLMV countries as well as the Asean Secretariat.
At the meeting, the ministers discussed and reviewed the progress in the implementation of the CLMV Action Plan 2017-2018 and 2019-2020.
Highlighted were the two projects that have been successfully implemented – namely E-tourism, which is an innovative approach to tourism micro, small and medium enterprises in the CLMV countries, and the Assessment of Legal and Regulatory Frameworks on Electronic Commerce. THE Hong Kong Stock Exchange has bid almost £32 billion ($39.457 billion) for its London rival in a shock move on Wednesday to bring together two of the world’s largest financial hubs in Asia and Europe.
The blockbuster proposal including debt is dependent on the London Stock Exchange Group (LSEG) scrapping a proposed $27 billion takeover of US financial data provider Refinitiv.
In reaction, LSEG said it would “consider the proposal” but stressed that it “remains committed” to buying Refinitiv.
The surprise news initially sent LSEG shares surging 10 per cent.
The stock later stood up 4.5 per cent at about £71, far below the offer price of more than £83 per share as analysts doubted the likelihood of a deal being struck given LSEG’s commitment to Refinitiv.
London’s benchmark FTSE 100 index was up 0.9 per cent overall in late morning deals.
“Hong Kong Exchanges and Clearing Limited [HKEX] today announces that it has made a proposal to the board of LSEG to combine the two companies,” it said in a statement.
The cash-and-shares offer is worth £31.6 billion including £2.0 billion of debt, HKEX added.
Connecting East with West
The Hong Kong company said a deal would create a combined group “ideally positioned to benefit from the evolving global macroeconomic landscape, connecting the established financial markets in the West with the emerging financial markets in the East, particularly in China”.
HKEX chairman Laura Cha said a deal represented a “compelling” opportunity.
She added: “We believe a combination of HKEX and LSEG represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe.
“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.”
The gigantic takeover comes just one month after the LSEG embarked upon a huge deal to acquire Refinitiv, a move that would create a market information giant to rival US titan Bloomberg.
The HKSE deal is subject to approval by both sets of shareholders, as well as the termination of the Refinitiv deal.
‘Scepticism’ over deal
“The proposed offer would be totemic in terms of EastWest relations,” said Richard Hunter, head of markets at online broker Interactive Investor.
But he also noted that the share price has shed half of its initial gains and remains far below the bid level.
“The proposal is a fascinating prospect but far from a done deal,” Hunter said.
“The fact that the LSE share price has already retreated from the initial 10 per cent spike on release of the news may reflect some initial scepticism around the likelihood of the deal going through.”
The Refinitiv takeover had marked a major change of LSE strategy and comes two years after its failed £21 billion merger with Germany’s Deutsche Boerse.
That gigantic deal – the third failed attempt at a tie-up between the British and German stock exchange operators – was blocked by the European Commission on fears it would undercut competition.