Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Hong Kong Exchanges and Clearing Limited    0388   HK0388045442

HONG KONG EXCHANGES AND CLEARING LIMITED

(0388)
  Report  
End-of-day quote. End-of-day quote Stock Exchange of Hong Kong - 10/18
238.2 HKD   +0.51%
10/18HONG KONG EXCHANGES AND CLEARING : Yellow application form
PU
10/18HONG KONG EXCHANGES AND CLEARING : Green application form
PU
10/18HONG KONG EXCHANGES AND CLEARING : White application form
PU
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Hong Kong Stock Exchange Makes $37 Billion Offer for LSE -- 4th Update

share with twitter share with LinkedIn share with facebook
share via e-mail
0
09/11/2019 | 12:12pm EDT

By Steven Russolillo and Ben Dummett

Hong Kong's stock exchange made an unsolicited $36.6 billion offer to acquire its London-based rival, a deal that would unite two of the world's major trading hubs when both are under severe political pressure.

Hong Kong is reeling from a summer of increasingly violent protests, with scenes of tear gas and Molotov cocktails playing out virtually every weekend on live television. London, meanwhile, is gripped by political paralysis as successive governments fail to find a way to implement an exit from the European Union due to take place next month. Bankers in both cities are trying to figure out whether things could get bad enough to force them to move out.

And yet Hong Kong Exchanges & Clearing Ltd. has picked this moment to launch what would be its biggest deal. A combination with the London Stock Exchange would create a global leader in capital flows and financial data by connecting developed and emerging markets in the East and West. It would also thwart the LSE's ambitions to transform itself from an exchange into a full-fledged data business by acquiring financial-information provider Refinitiv Holdings Ltd., which used to be part of Reuters, for $14.5 billion in stock.

Data is expected to be a key battleground for exchanges in the coming years as many rethink their historical reliance on listing and trading companies and look for new revenue streams based on the vast amounts of data flowing through them.

"You don't choose timing, you choose what is the right thing to do," Charles Li, chief executive of the Hong Kong exchange, said during a conference call Wednesday.

"This has nothing to do with Hong Kong's situation," he added.

The London exchange criticized the offer as "preliminary and highly conditional." It said it would consider the proposal but remains committed to the Refinitiv deal.

"We are here like a corporate Romeo and Juliet," Mr. Li, said on the conference call. "We know we were late. ...We want to openly express our admiration."

The Hong Kong exchange could face significant political hurdles to completing a deal. A number of transactions have been scuttled by concerns about Chinese access to sensitive data, and financial information is high on the sensitivity index. Hong Kong enjoys significant autonomy from China -- with a separate legal system and freely convertible currency -- but recent political moves have tested those boundaries.

"Any regulator would need to think carefully about the implications of the political situation and Beijing's increasing control over Hong Kong, " said David Webb, an outspoken private investor in Hong Kong. "This strikes me as an aspirational proposal that probably won't go through."

The Hong Kong exchange said its offer -- valued at GBP29.6 billion in cash and stock -- represents a 22.9% premium to the London exchange's closing stock price on Tuesday. It proposed paying roughly a quarter of the purchase price in cash and the rest in stock.

"This is an audacious move," said Larry Tabb, founder and research chairman of the financial markets research and advisory firm Tabb Group. "LSE is one of the few really prestigious global exchange brands."

LSE shares, which have soared following the Refinitiv deal announcement, jumped as much as 16% Wednesday before trimming some gains.

The London Stock Exchange, which traces its history back hundreds of years, has proven one of the world's most difficult acquisition targets over the past two decades. German rival Deutsche Boerse AG has twice failed to take over the exchange, as has the technology-heavy U.S. exchange Nasdaq Inc. A Swedish exchange and Australian investment bank Macquarie Group also haven't completed takeovers.

"This deal seems so out of left field, especially after Refinitiv," said Brad Bailey, research director for capital markets at Celent in New York. "I was very surprised."

If the Hong Kong exchange's bid for LSE succeeds, it would create an Asian-European giant that would rival the two biggest players in the global exchange business, both of them U.S. firms: Chicago-based CME Group Inc. and Atlanta-based Intercontinental Exchange Inc., or ICE.

CME has a market capitalization of over $72 billion, while ICE -- the parent of the New York Stock Exchange -- is worth about $50 billion. Both U.S. firms rode a wave of consolidation in the exchange business over the past two decades to amass more heft than their European and Asian rivals.

Mr. Li, in a blog post on the Hong Kong exchange's website, said the proposal comes after "many months of consideration" and marks a milestone for the city, which has built itself into a global financial center as China's economic growth has accelerated. He said a partnership between the two exchanges "will strengthen ties between the U.K. and China, particularly in economic and trade terms."

Illustrating the unrest's pressure on Hong Kong's economy, flagship carrier Cathay Pacific said Wednesday that its inbound traffic fell 38% in August from a year earlier amid a slump in tourism. Outbound trips also took a hit, and Cathay said premium-class travel fell more than leisure travel, a sign of pressure on business. The company expects September to be just as difficult and said it was slowing its capacity additions for the year.

The Hong Kong exchange first approached the LSE after the U.K. exchange operator announced its deal with Refinitiv, and the two sides have held preliminary discussions, according to a person familiar with the matter.

The Hong Kong exchange decided to make its offer public so that shareholders of both companies could assess its merits, the person said.

"We are looking forward to further conversations and to take a deeper dive," Mr. Li said on Wednesday.

The Hong Kong exchange dominates its home market and has thrived by plugging mainland China into the global financial system, initially through hosting stock listings, and more recently through trading arrangements that connect the world's investors to otherwise hard to access markets in Shenzhen and Shanghai.

Last year it made a record profit of roughly $1.2 billion, equal to nearly 59 cents out of every dollar it took in as revenue or in other ways, chiefly as income on investments.

Hong Kong is a crucial throughway for capital flows into and out of China. The exchange was the world's biggest for initial public offerings last year, lifted by multibillion-dollar share sales by several of China's most valuable technology and internet companies.

The dollar value of new listings in Hong Kong has shrunk sharply this year, and trading has slowed, as trade tensions, China's economic slowdown and unrest in the city have dented market sentiment.

Companies raised $9.5 billion via Hong Kong IPOs in the year through Wednesday, or roughly 40% of the total raised in the same period last year, according to Dealogic. In July, Anheuser-Busch InBev SA halted a near-$10 billion listing of its Asian unit, blaming market conditions.

In August, the average daily turnover of securities traded on HKEX fell 8.4% from a year earlier.

On Wednesday, however, China's Shanghai Henlius Biotech Inc. began taking orders for an IPO worth up to $477 million, in what would be the city's first sizable listing since July, and some other companies are also gearing up for substantial market debuts.

Julie Steinberg and Alexander Osipovich contributed to this article.

Write to Steven Russolillo at [email protected] and Ben Dummett at [email protected]

Stocks mentioned in the article
ChangeLast1st jan.
ANHEUSER-BUSCH INBEV -0.07% 83.54 Delayed Quote.44.78%
CATHAY PACIFIC AIRWAYS LIMITED -2.16% 9.96 End-of-day quote.-10.27%
CME GROUP INC. 0.08% 213.17 Delayed Quote.13.32%
DEUTSCHE BÖRSE AG 0.25% 143 Delayed Quote.36.26%
HONG KONG EXCHANGES AND CLEARING LIMITED 0.51% 238.2 End-of-day quote.4.20%
INTERCONTINENTAL EXCHANGE, INC. 0.13% 94.4 Delayed Quote.25.32%
LONDON STOCK EXCHANGE PLC 0.82% 7102 Delayed Quote.74.84%
MACQUARIE GROUP LIMITED 0.13% 133.82 End-of-day quote.23.01%
NASDAQ 0.29% 98.62 Delayed Quote.20.90%
NASDAQ COMP. -0.83% 8089.54332 Delayed Quote.22.93%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on HONG KONG EXCHANGES AND CL
10/18HONG KONG EXCHANGES AND CLEARING : Yellow application form
PU
10/18HONG KONG EXCHANGES AND CLEARING : Green application form
PU
10/18HONG KONG EXCHANGES AND CLEARING : White application form
PU
10/18HONG KONG EXCHANGES AND CLEARING : Global offering
PU
10/18LSE gets earnings boost ahead of Refinitiv deal vote
RE
10/18HONG KONG EXCHANGES AND CLEARING : Exchange Announces the Effective Date of Unwi..
PU
10/18HONG KONG EXCHANGES AND CLEARING : Disclosure of Dealings under Rule 22 of the T..
PU
10/18LSE Group third quarter income rises ahead of Refinitiv deal vote
RE
10/17HONG KONG EXCHANGES AND CLEARING : London Metal Exchange set to hike fees eight ..
AQ
10/16HONG KONG EXCHANGES AND CLEARING : Procedures for a shareholder of the company t..
PU
More news
Financials (HKD)
Sales 2019 16 332 M
EBIT 2019 11 328 M
Net income 2019 9 518 M
Finance 2019 122 B
Yield 2019 2,85%
P/E ratio 2019 31,4x
P/E ratio 2020 27,8x
EV / Sales2019 10,9x
EV / Sales2020 10,7x
Capitalization 300 B
Chart HONG KONG EXCHANGES AND CLEARING LIMITED
Duration : Period :
Hong Kong Exchanges and Clearing Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends HONG KONG EXCHANGES AND CL
Short TermMid-TermLong Term
TrendsNeutralBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 267,07  HKD
Last Close Price 238,20  HKD
Spread / Highest target 32,7%
Spread / Average Target 12,1%
Spread / Lowest Target -11,8%
EPS Revisions
Managers
NameTitle
Xiaojia Li CEO & Executive Director
Romnesh Lamba Co-President
Chi Kin Tai Co-President & Chief Operating Officer
May Lung Cha Non-Executive Chairman
John F. Killian Chief Financial Officer
Sector and Competitors
1st jan.Capitalization (M$)
HONG KONG EXCHANGES AND CLEARING LIMITED4.20%38 214
INTERCONTINENTAL EXCHANGE, INC.25.32%52 903
LONDON STOCK EXCHANGE PLC74.84%31 920
DEUTSCHE BÖRSE AG36.26%29 199
B3 SA BRASIL BOLSA BALCAO0.00%23 023
NASDAQ20.90%16 242