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Britain for Sale

Weakened sterling attracts foreign buyers trying to grab UK assets for cheap.

GAME CHANGERS
Hong Kong Exchanges and Clearing has made a £32 billion offer to buy the London Stock Exchange.

The move is the best demonstration of what appears to be a trend: attempts from for North American and Asian buyers to take advantage of weakened sterling and grab UK assets.

But this is not just about Britain. If the bid proves successful it would mean that a Chinese company gets control over the UK primary equity market and the gateway to debt markets in Europe.

Hong Kong Exchanges and Clearing said a merger of the two companies would bring together “the largest and most significant financial centres in Asia and Europe” and create a “global market infrastructure leader”.

“The proposed combination would strengthen both businesses,” the statement says, “better position them to innovate across markets and geographies, and offer market participants and investors unprecedented global market connectivity”.

The problem with the claim is that it is, most likely, correct and the merger would indeed create a global leader. Yet this leader would be effectively controlled by China.

Hong Kong Exchanges and Clearing proposed a cash-and-shares deal which would see it pay around £8.36 a share for LSE Group. This values it at £29.6 billion but the total bid would come to £31.6 billion including the LSE's debt.

The proposal is conditional on LSE Group dropping its plan to buy data provider Refinitiv. In late July, the LSE agreed to buy the data and trading group Refinitiv for $27 billion in an effort to take on global heavyweights such as Intercontinental Exchange.

London Stock Exchange Group described the offer as “unsolicited, preliminary and highly conditional”.

Shares in London Stock Exchange Group surged 5 per cent after the offer was announced.

Published: September 12, 2019