Investing.com - Shares of the Hong Kong Exchanges and Clearing Limited (HKEX) fell after the bourse made a surprise takeover bid for the London Stock Exchange Group (LON:LSE).
The proposed takeover approach is worth 31.6 billion pounds ($38.97 billion) and will consist of both cash and newly issued HKEX shares. The figure represents a 22.9% premium on the LSE’s closing price on Tuesday.
Under the terms of the offer, LSE shareholders would receive 20.45 pounds in cash and 2.495 newly issued HKEX shares.
Hong Kong Exchange and Clearing Ltd (HK:0388)’s share prices fell 3.5% to HK$237.20 by 12:30 AM ET (04:30 GMT) on Thursday following the news.
Citing David Blennerhassett, an independent analyst writing on the SmartKarma research platform, Reuters said Hong Kong’s status as part of China could make it difficult to win approval for the deal from British politicians and regulators.
“It will be politically tough now and in the near-term to get this through various regulatory channels,” he said.
The Financial Times echoed Blennerhassett’s comments, adding that the bid is poised to be rejected amid doubts about political risk and deal structure.
Protests against a highly controversial extradition bill began in June and have crippled Hong Kong’s stock market and its economy. The now-withdrawn bill allows criminal suspects to be transferred to mainland China for trials. While the protests started as peaceful marches on the streets, the unrest became increasingly violent escalated into anti-government movements that saw protestors occupying the airport and disrupting its services, tear gas fired by police forces and hundreds of citizens arrested.