LSE share price: Analysts weigh in on merger offer

LSE share price: Analysts weigh in on merger offer
Written by:
Tsveta van Son
12th September 2019
Updated: 11th March 2020
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Analysts have weighed in on Hong Kong Exchange’s shock merger offer for London Stock Exchange Group (LON:LSE), expressing doubts that it would result in a deal. The comments come after Hong Kong Exchanges and Clearing (HKEX)  proposed a tie-up yesterday “to create a global market infrastructure group”.

LSE’s share price has been little changed in London this morning, having inched 0.08 percent higher to 7,212.00 points as of 10:37 BST. The advance is largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.03 percent higher at 7,340.46 points.

Merger deal seen as unlikely

Sharecast quoted Neil Wilson, chief market analyst at Markets.com, as commenting that Hong Kong Exchange’s bid for LSE was a ‘non-starter,’ calling it “a bold move and one that appears to have a low chance of success”.

“Given the long and ignoble history of bids for LSE we think there is a very high bar to clear in order for this to succeed,” he pointed out, adding that “whilst HKEX already has a foothold in the UK via its ownership of the LME, the LSE is a different ball game entirely”.

The newswire quoted Richard Hunter, head of markets at Interactive Investor, as commenting that the “proposed offer would be totemic in terms of East-West relations and the complementary strengths of the two exchanges would make strategic sense”. He, however, also cautioned that this is ‘an initial shot’ and “as such, not surprisingly, it will throw out a number of questions rather than answers at this stage”.

Analyst ratings update

Deutsche Bank reaffirmed its rating on the FTSE 100 group as a ‘hold’ today, without specifying a target on the LSE share price. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average valuation of 5,697p.

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