SIC2H19: How Compelling Would HKEX Make Its Offer To Win Over LSE?

Chan Yan Chong

Do not miss the chance to catch Dr. Chan at the upcoming Shares Investment Conference in November!

On 11 September 2019, the Hong Kong Stock Exchange (HKEX) announced a £29.6 billion cash-and-stock acquisition offer to  to the London Stock Exchange (LSE) to create an Anglo-Asian connectivity platform that benefits all of China, Hong Kong and the UK. HKEX CEO Li Xiaojia, said the deal was a “marriage of the century.” Should the two successfully merges, the expected market value will likely exceed US$70 billion.

However, on the third day upon receiving the offer, LSE’s board unanimously rejected the HKEX’s proposal. According to the LSE, the Shanghai Stock Exchange has always been its “preferred and direct channel to access the many opportunities with China and hence why the proposal is not in line with the strategic objectives.

Many people are also wondering if HKEX would be paying too high a price, which could impact on future profits. On the other hand, many also believe that the British government will strongly oppose this acquisition.

In his opinion, Dr. Chan believes that the HKEX bid must be attractive enough for LSE to consider the offer. On paying a sizeable premium, HKEX view is that it would be able to earn back in profits over the long haul. Considering that both exchanges are the world’s sixth and seventh largest bourses, the combined synergy would reap enough benefits to justify the high premium.

The merger, if successful, will not only benefit Hong Kong and Mainland China, but also the UK. Specifically, Chinese companies will find it easier to access the UK capital markets.

As such, the British government will still consider the merger proposal seriously. The critical factor would be how far HKEX would sweeten the deal. Everything has a price. 


Can’t wrap your heads around developing trends? Is your portfolio being held hostage to Trump’s whim and oh-so-frequent tirade? Are you worried about Hong Kong’s social unrest? 

Our favourite GURU, Dr. Chan Yan Chong Is BACK! Best known for forecasting the peaks and troughs in the stock market cycle, Dr. Chan will share his foresight on various stock markets’ performances at Shares Investment Conference 2H19! Learn from The GURU himself and chart a smooth investment journey! 

Get your tickets today!