London Stock Exchange swats away $37 billion Hong Kong offer

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A reception desk at London Stock Exchange on August 29, 2019 in London, England.

The London Stock Exchange on Friday dismissed the 29.6 billion pound ($37 billion) takeover bid from the Hong Kong Exchanges and Clearing.

The LSE decision to reject the overture came as little surprise given the complicated political situation, as well as its own strategy to boost its presence in financial markets data. LSE shares

LSE, +1.82%

 were stronger on the day, reflecting market sentiment that the bid would fail.

In a statement, the LSE said it wanted to pursue its $27 billion deal for Refinitiv, which it says has been “exceptionally well received.” Refinitiv Holdings, held by Blackstone

BX, +3.61%

 and Thomson Reuters

TRI, +0.96%

 , offers an array of financial data.

By contrast, the LSE said a combination with Hong Kong

388, +1.43%

 would “represent a significant backwards step” strategically. LSE said it didn’t see merit in further engagement.

The Hong Kong exchange’s relationship with the Hong Kong government also would present difficulties, seeing as governments not just in the U.K. but also the U.S. and Italy would have to sign off on the deal.

“Accordingly, your assertion that implementation of a transaction would be “swift and certain” is simply not credible. On the contrary, we judge that the approval processes would be exhaustive and that support from relevant parties, vital for the transaction, is highly uncertain,” the LSE said.

The LSE also pointed out that three-quarters of the bid would be in HKEX shares, which it called “inherently uncertain,” as did what it called the “ongoing situation in Hong Kong,” a reference to the protests there.

The LSE said while it recognizes the scale of opportunity in China, it prefers an existing relationship with the Shanghai Stock Exchange.

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