Hong Kong Exchanges and Clearing has dropped its £32 billion takeover pursuit of the London Stock Exchange Group, ending its ambitious attempt to create a global markets giant.
HKEX said it would not be making a firm offer after failing to win over the LSE board and amid reports that major shareholders were also unconvinced.
Shares in the LSE fell 5% after as the HKEX approach added to a long list of failed mega-mergers with the London bourse.
Its decision to pull the approach comes less than a month after HKEX launched its surprise and unsolicited tilt for the LSE, in a move which threatened to disrupt its London rival’s planned 27 billion US dollar (£21.9 billion) deal to buy data provider Refinitiv.
The LSE gave HKEX short shrift, rejecting the approach as being too low and “fundamentally flawed”.
HKEX had then embarked on a charm offensive in an attempt to gain support from sceptical shareholders.
Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSE in realising this visionHong Kong Exchanges and Clearing
HKEX said: “The board of HKEX continues to believe that a combination of LSE and HKEX is strategically compelling and would create a world-leading market infrastructure group.
“Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSE in realising this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal.”
HKEX had said on launching its approach that the deal would strengthen both businesses, give them better geographical reach and offer market participants and investors “unprecedented global market connectivity”.
But there were potential competition hurdles and significant political issues – not least concerns over Chinese access to financial information.
It also came amid a political crisis in the territory, with violent anti-government protests having raged in Hong Kong for the past four months.
Markets.com chief market analyst Neil Wilson said: “As we said at the time, this deal was a non-starter for a range of reasons, any one of which would have been enough to block a merger.
“Still we’re slightly surprised HKEX didn’t try again – the fact they didn’t suggests their charms, dubious as they are, were completely lost on the big shareholders.”
But he added it “remains unclear” if one of the big US stock exchange rivals will now step in with a fresh bid for the LSE, especially with the Brexit-hit pound making UK assets more attractive to overseas buyers.