The HKEx will need to convince British politicians and European regulators to abandon its deep-seated doubts about the merger of financial exchanges.
The HKEx also needs to try to get its shareholders to abandon Refinitiv, the financial data provider. The LX agreed last month to buy Lufford for $27 billion, and shareholders are inclined to support the retention of Lufford's ownership. The closing price of the stock on Wednesday was significantly lower than the merger offer on the Hong Kong Stock Exchange, which seems to bode ill for the prospects of merger trading between the two exchanges.
The HKEx's proposed merger is a bet that large international acquisitions will help it overcome local uncertainties. Protests in Hong Kong over the past few months have raised suspicions among large businesses and investors about the attractiveness of the Hong Kong Stock Exchange.
The Hong Kong Stock Exchange also sought to capitalize on the weakness of the pound. Britain's failure to reach a withdrawal agreement has hit sterling. The weakening pound has made British companies cheaper for foreign buyers.
The deal is intended to create a group that can rival American rivals such as the Intercontinental Exchange (ICE. N) and the Chicago Mercantile Exchange (CME. O). The deal will depend on whether the London Stock Exchange abandons the Lufford deal.
"The board of directors of the Hong Kong Stock Exchange believes that the proposed merger with the London Stock Exchange is a significant strategic opportunity for mutual benefit and win-win results, and can create a leading global financial infrastructure," the Hong Kong Stock Exchange said in a statement.
The London Stock Exchange said it would evaluate the Hong Kong Stock Exchange's offer and said it would work to push forward the acquisition of Lufford from Blackstone Group (BX.N) and Thomson Reuters (TRI.TO), a sign of its indifference to the offer.
Spokesmen for Lufford, Blackstone and Thomson Reuters declined to comment.
Under the proposed terms of the transaction, the HKEx intends to replace one share of the London Stock Exchange with 2,045 pence cash and 2.495 new shares at a price of about 8,361 pence per share, a 22.9% premium to the closing price of 6,804 pence per share on the London Stock Exchange on September 10, 2019, and 30.2% of the EBITDA profit before tax, depreciation, amortization and impairment in 2018. Times.
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