Hong Kong Exchanges and Clearing Ltd (HKEX) made a $39 billion offer to purchase the London Stock Exchange Group (LSE) in early September, only to withdraw it less than a month later. The deal had a slim chance of success from the onset, as shareholders in LSE were not optimistic about the deal. The unsolicited offer would have caused LSE to neglect its plan to acquire Refinitiv for $27 billion. HKEX was unable to convince LSE shareholders about the strategic advantage the global merger would have. As a result, the share price of HKEX dropped 8 per cent after the deal was announced, then went up by 2.3 per cent after they announced it had been called off. LSE’s stock price on the other hand fell by 6 per cent after HKEX withdrew their offer.

The chief executive of the Hong Kong bourse Charles Li remained adamant that the deal would have been good for both parties. “We still believe the strategic rationale for the combination of our two businesses is compelling and would create a world-leading market infrastructure group. Despite a huge amount of work and discussions with a broad set of regulators and extensive shareholder discussions, the level of engagement from LSEG led us to conclude that the continued pursuit of a combination of the two businesses would not be in the best interests of our own shareholders,” he wrote in a blog post.

According to anonymous sources, LSE investors were opposed to the deal from a strategic point of view, although a higher offer might have swung the vote. Hong Kong’s ongoing battle with China was noted as a factor, with LSE shareholders concerned HKEX will fall under the control of the Chinese government.