London Stock Exchange Group’s (LON:LSE) share price has surged this Wednesday as Hong Kong Stock Exchange shocked the market with a tie-up proposal. The proposed cash-and-share deal values the FTSE 100 group at about £30 billion.
As of 10:38 BST, LSE’s share price had gained 6.45 percent to 7,236.00p. The shares are outperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.86 percent higher at 7,330.26 points.
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Hong Kong Exchange tables bid
Hong Kong Exchanges and Clearing (HKEX) announced in a statement today that it had made a proposal to the Board of London Stock Exchange Group to combine the two companies. Under the terms of the proposal, shareholders in the FTSE 100 group would receive 2,045 pence in cash and 2.495 newly issued HKEX shares for each LSEG share. The price implies a value of about 8,361 pence per share, or £29.6 billion for LSE’s entire issued and to be issued ordinary share capital, implying an enterprise value of £31.6 billion.
“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,” Laura Cha, Chairman of HKEX, commented in the statement.
The tie-up proposal comes after LSE unsuccessfully tried to merge with Deutsche Boerse, with the EU blocking the deal back in 2017.
“The LSE’s share price has been strong year to date and there have been thoughts the group could be a target again,” Graham Spooner, investment research analyst at The Share Centre, commented, as quoted by City A.M.
FTSE 100 group to consider proposal
LSE issued a short statement noting the bid, saying that it “will consider this Proposal and will make a further announcement in due course”.
Today’s merger proposal comes after LSE recently sealed the deal to buy financial services company Refinitiv in an all-share transaction for a total enterprise value of approximately $27 billion.