Market Overview

Skepticism Surrounds Proposed Hong Kong-London Stock Exchange Deal

Skepticism Surrounds Proposed Hong Kong-London Stock Exchange Deal

The Hong Kong Exchanges and Clearing company's proposed $37-billion acquisition of rival London Stock Exchange could be dead on arrival, with the London exchange reportedly set to reject the offer and U.K. regulators likely to block a deal

Bloomberg Commentator: Odd Deal

The London Stock Exchange appears to be set on rejecting the unsolicited offer, which was confusing in the first place, Bloomberg's Jan-Henrik Foerster said on "Bloomberg Surveillance" Thursday.

The offer comes at a time when the streets of Hong Kong are filled with protesters, while London is in political turmoil related to Brexit.

Out of nowhere, the smaller Hong Kong exchange reached out to buy the larger London exchange, he said.

The LSE has its own pending M&A offer, as it proposed in August to buy financial data provider Refinitiv for $27 billion.

Strategist: Europe Has a Role On Global Stage

Cross-border, multibillion-dollar transactions are hard to complete at the "best of times," and now is "hardly the best backdrop" to oversee a major transaction, Steve Grob, founder of Vision57, told CNBC Thursday.

International stock market M&A deals are littered with multiple failures.

Most notably, the Singapore Exchange terminated its $8-billion offer to buy Australia's ASX exchange in 2011.

The Deutsche Boerse attempted three times to buy the LSE, as did the Nasdaq exchange.

The reason prior deals resulted in failure is as simple as governments not wanting a "central piece of infrastructure" to be owned by foreign power, he said.

This is especially true across Europe where the mentality is that local assets serve local needs, as opposed to being a "champion in Europe for the rest of the world."

"The optics of it is so bad," Grob said.

Related Links:

The London And Hong Kong Stock Exchanges Could Merge

Ex-NYSE CEO: Hong Kong Exchange Makes Big Bet With LSE Offer

Photo via Wikimedia


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