The London Stock Exchange Group (LNSTY) rejected a near $40 billion takeover offer from the Hong Kong Exchanges and Clearing Limited Friday, calling the approach "fundamentally flawed" and one that "significantly undervalues" the Lonon-based operator.
The LSE said it sees "no merit" in any further engagement with the Hong Kong exchange group, and reiterated its plans to buy analytics firm Refinitiv from private equity group Blackstone Group (BX) - Get Report for around $27 billion.
We were very surprised and disappointed that you decided to publish your unsolicited proposal within two days of our receiving it," the LSE said in a letter to the Hong Kong exchange it published Friday. "Having now considered your letter and the associated documents carefully with our financial and legal advisors, the Board has fundamental concerns about your proposal."
"Our planned acquisition of Refinitiv meets LSEG's strategic objectives across its businesses which the Board believes to be critical for a leading Financial Markets Infrastructure provider of the future," the letter continued. "In stark contrast, the high geographic concentration and heavy exposure to market transaction volumes in your business would represent a significant backward step for LSEG strategically."
LSE Group shares were marked 3.8% higher in London following release of the rejection letter to change hands at £75.26 each, a move that values the company at just over £26.3 billion ($32.6 billion) and extends the stock's three-month gain to around 39.2%.
The HKEX, which already owns the London Metals Exchange, said it would pay £83.61 for each LSE Group share, a price that values the entire group, including its outstanding debt, at around £31.6 billion ($39 billion).
Refinitiv, which majority-owns the fixed income trading venue Tradeweb as well as the foreign exchange trading platform FXAll, is best known for its data analytics business, a leading provider of real-time pricing, reference data, private and public company information and events.