Business Maverick: Unsolicited $36.6 Billion LSE Bid Kicked Off by Surprise Visit

In a hastily called meeting, the 58-year-old Li told Schwimmer and LSE Chairman Don Robert that he wanted to buy the three-century-old U.K. exchange, according to a person familiar with the matter, who asked not to be identified discussing a private conversation. The executives were caught off-guard, and were surprised when HKEX made an unsolicited bid for LSE less than 30 hours later, the person said.

Shares of HKEX fell 3.3% in premarket trading in Hong Kong. Citigoup analysts on Wednesday cut the exchange operator’s rating to sell from buy with a new target of HK$210 a share, writing that the high offer could weigh on HKEX’s shares in the near term, while there’s risk the deal won’t be approved by regulators.

LSE senior managers were blindsided by the offer, said another person familiar with the situation who asked not to be named discussing matters that aren’t public. Internally, recent meetings have concentrated on the significant benefits of the Refinitiv deal, the person said. LSE’s shares pared earlier gains, reflecting skepticism that a deal can be done in the face of unrest in Hong Kong and potential concern over Chinese ownership. Under the proposal, HKEX would offer 2,045 pence as well as 2.495 newly issued HKEX shares per LSE share. That values each LSE share at 8,361 pence, the Hong Kong bourse said in its statement. The shares ended the day up 5.9%, but almost 14 percent below the offer price.In London, U.K. Business Secretary Andrea Leadsom said the U.K.

Keefe Bruyette and & Woods analysts led by Kyle Voigt said in a note that the HKEX bid has higher political risks than the Refinitiv deal, and that LSE shareholders who view the Refinitiv transaction favorably see value creation well above the offer price. It said that the 14.5% premium to Friday’s close wouldn’t be attractive enough for shareholders to walk away from Refinitiv.

Singapore Exchange Ltd.’s $8.8 billion bid for ASX Ltd. collapsed after the Australian government said the deal wasn’t in the national interest.

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