After weeks of trying to convince the London Stock Exchange (LSE) to accept its acquisition bids, Hong Kong Stock Exchanges and Clearing Ltd (HKEX) has now announced that it will be halting all of its takeover efforts.
The exchange operator announced this week that it has dropped its $39 billion bid for the European exchange following its various failed attempts.
The decision was reportedly made by the bourse operator's board after a meeting over a public holiday on Monday. According to reports citing sources close to the matter, the board members made the decision based on the fact that China openly did not support the acquisition attempt and was more concerned about bolstering the LSE's tie-up with the Shanghai Stock Exchange.
The sudden pullout of the exchange's highly-touted bid is a massive setback for the company and for its CEO Charles Li. In its exchange filing on Tuesday, HKEX mentioned that it still considers the bid for the LSE as "strategically compelling."
The company stated that it was very much disappointed that it was not able to reach and consensus with the LSE's management, but the decision was made with the best interest of its shareholders in mind.
China's largest exchange by revenue has struggled to recover from the LSE's rejection of its various offers. Company executive had met with LSE shareholders on various occasions in both New York and London to try and iron out a deal. HKEX was reportedly also in talks to borrow as much as $9.83 billion to fund its planned acquisition.
HKEX's withdrawal is a massive load off the LSE's shoulders and will likely now give it enough freedom to pursue its other agendas. The LSE has mentioned that it with HKEX's unwelcomed bid now off the table, it can now focus on its planned $27 billion acquisition of Refinitiv.
The acquisition is seen by the company as an opportunity to diversify its portfolio to include big data-related services.
LSE CEO David Schwimmer previously mentioned that the company does prefer to have direct access to China as opposed to becoming a conduit for the HKEX. The LSE had reasoned that it had decided to reject HKEX's offers due to a variety of potential issues ranging from political clashes and potential problems with regulators.
The LSE continued to decline all of the HKEX's advanced, even when it brought in large investment firms such as UBS Group and HSBC Holdings to back up its offers.
The botched merger attempt has caused the stock prices of both companies to dip over the past months. Since June, the HKEX has seen its shares drop by around 7 percent. Meanwhile, the LSE has seen its stocks decline by as much as 6.7 percent.