Hong Kong Exchanges and Clearing (OTCPK:HKXCY) has made a £32B unsolicited bid to buy the London Stock Exchange (OTCPK:LDNXF), looking to break up the United Kingdom group's agreed deal for Refinitiv (BX, TRI).
HKEX's publication of its offer caught the London Stock Exchange off-guard.
UK Business Secretary Andrea Leadsom, speaking on Bloomberg Television as news of the deal broke, said the British government would scrutinize any tie-up between the exchanges.
The stock later stood up 4.5% 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.
The proposed 31.6 billion pounds cash-and-share transaction would only go ahead if the LSE's proposed takeover of Refinitiv does not proceed, HKEX said.
The LSE said it would review the proposal but added that it was committed to and continued to make good progress on its planned acquisition of Refinitiv from a consortium led by US private equity firm Blackstone BX.N .
However, HKEX added that a condition of the offer would be LSE shareholders rejecting plans for a US$27bn all-share merger with Refinitiv, which was originally announced in July, before the end of the year. The HKEX said that its offer will be dependent on the LSE dropping the Refinitiv purchase.
Under the proposed offer, HKEX would offer 2,045 pence as well as 2.495 newly issued HKEX shares for each LSE share.
The Asian bourse operator had considered the "ambitious and far-reaching" deal for one of Europe's largest exchanges for many months, HKEX Chief Executive Officer Charles Li said in a statement Wednesday.
LSEG stock surged 6.5% on the news.
The bidder said a merger of the two companies would create a "global market infrastructure leader".
HKEX mentioned: 'The proposed mixture would strengthen each companies, higher place them to innovate throughout markets and geographies, and provide market individuals and traders unprecedented global market connectivity'.
"HKEX is fully committed to supporting and building the long term roles of both London and Hong Kong as global financial centres", it added.
In 2017, European Union regulators blocked a proposed £21bn merger between the LSE and Germany's Deutsche Boerse.