Speculation over the London Stock Exchange’s future reached fever pitch today as a £32bn offer from its Hong Kong rival came under fierce scrutiny over regulatory concerns and the possibility of alternative bids.
More than $1bn was wiped from the Hong Kong Exchanges and Clearing (HKEX) during trading as investors reacted to the firm’s proposed bid to buy the LSE and “redefine global capital markets for decades to come”.
Read more: Hong Kong stock exchange share price drops
Prominent City figures such as Xavier Rolet, the former head of the LSE, raised questions over the difficulties in getting an HKEX-LSE merger over the finishing line.
“The first concern is ensuring any change of ownership does not impact the stability of its systemic functions,” he told the BBC.
The second concern was whether the takeover would change control and impact the governance of the exchange, Rolet said.
The comments echo a number of doubts raised by analysts and investors in the Square Mile in the last 24 hours over whether the proposed tie-up would be given the green light by regulators.
Deutsche Bank analysts said in a note this morning that they saw several major hurdles to a LSE/HKEX deal and “do not expect LSE’s share price to trade close to the bid price anytime soon”.
Read more: Hong Kong’s bid for LSE whips up a storm
Doubts have also been raised over whether LSE directors would accept the deal. UBS said it would be “surprised to see LSE’s management and board prefer a takeover bid from HKEX” rather than its own deal to buy data firm Refinitiv, which would have to be scrapped under any deal with HKEX.
One City figure involved in the botched merger talks between LSE and Deutsche Boerse in 2017 told City A.M. that he would “not be surprised if the US regulators take a long hard look at this”.