London Stock Exchange’s (LON:LSE) board is set to meet in the coming days to decide on Hong Kong Exchange’s shock merger approach, Reuters reports. Hong Kong Exchanges and Clearing proposed a tie-up this week as it looks “to create a global market infrastructure group”.
LSE’s share price has climbed higher in London this Friday, having gained 1.16 percent to 7,336.00p as of 08:59 BST. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally lower and currently standing 0.07 percent in the red at 7,339.76 points.
LSE to decide on merger bid
A person close to LSE told Reuters that the group’s board will meet in coming days to decide on Kong Kong Exchange’s takeover proposal. The source, however, noted that the unsolicited bit was not expected to succeed given a preference among LSE investors for the exchange to complete its £21.88-billion proposed acquisition of data and analytics group Refinitiv.
The FTSE 100 group reportedly wants to focus on executing that deal, rather than risk it being derailed by the Hong Kong bourse. A person close to the Hong Kong Exchange, however, told Reuters that a rejection of an initial approach was common in takeovers and HKEX was already considering its next step.
Analysts flag merger concerns
Reuters also quoted analysts as commenting that a perception that Beijing is exerting growing influence over Hong Kong could become another key sticking point for an LSE takeover, given the Hong Kong government’s close links with the HKEX.
“Increasing control by Chinese authorities over Hong Kong” could raise regulatory concerns in Britain and the United States about data and information security, Fitch Ratings commenting, as quoted by the newswire.
According to MarketBeat, the FTSE 100 group currently has a consensus ‘buy’ rating, while the average target on the LSE share price stands at 5,697p.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.