LSE share price: HKEX to pursue merger despite rejection

Hong Kong Exchanges and Clearing has vowed to press on with its £32-billion takeover bid for the London Stock Exchange (LON:LSE), the Financial Times has reported. The news comes even as the FTSE 100 company rejected the unsolicited tie-up proposal on Friday.

LSE’s share price rose in the previous session, gaining 3.61 percent to close at 7,514.00p, outperforming the broader UK market, with the benchmark FTSE 100 index climbing 22.79 points to end trading 0.31 percent higher at 7,367.46. The group’s shares have added more than 58 percent to their value over the past year, as compared with about a one-percent gain in the Footsie.

HKEX vows to pursue merger

The FT reported that the Hong Kong Exchange had said that it was disappointed with LSE’s rejection last week, and would press its case with the FTSE 100 group’s shareholders, with investor meetings being arranged this week. On Friday, the London Stock Exchange issued a statement, saying that its board had fundamental concerns about the key aspects of the tie-up proposal.

“Accordingly, the Board unanimously rejects the Conditional Proposal and, given its fundamental flaws, sees no merit in further engagement,” the LSE said in the statement.

The FT quoted Roger Barron, M&A partner at law firm Paul Hastings, as commenting that HKEX “must have known an unsolicited wouldn’t have been popular”. This in turn leaves it with the choice of walking away or appealing directly to shareholders.

“You would have to think they’d have the courage of their convictions to take it forward,” he pointed out.

Analysts on FTSE 100 group

Deutsche Bank reaffirmed the FTSE 100 company as a ‘hold’ last week, with a target of 6,800p 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.