UK Edition
Hong Kong under pressure to sweeten London Stock Exchange bid
Hong Kong is under growing pressure to sweeten the terms of its £32bn offer for the London Stock Exchange as a takeover battle for the British bourse intensifies.
Executives from Hong Kong Exchanges and Clearing (HKEX) have launched a charm offensive with top LSE investors after its shock approach last week was snubbed by the group's board.
Without a higher price, shareholders are thought to be reluctant to seriously consider a deal.
Top LSE shareholders told The Telegraph they will only entertain the move if they can be convinced that the LSE's planned £22bn takeover of data provider Refinitiv is "absolute rubbish", that regulators will approve the deal and that the bid is sweetened.
One top shareholder said the bid "needs more of a cash element" to be taken seriously.
"If they up the deal materially it might spark a bit more interest," another top 20 investor said. "We will see them, but I don't think it's a runner really."
Colin McLean, a fund manager at SVM Asset Management who has a small holding in LSE Group, said there was no basis in which he would consider the offer due to the political risks associated with the deal. He added that Refinitiv was a "good match" for London.
The comments come hours after the LSE hired US investment bank JPMorgan to advise it on a potential hostile bid, according to regulatory filings.
Executives at the Hong Kong exchange are understood to be meeting up to five top shareholders a day over the coming weeks in an attempt to bring them on side.
They are thought to be focusing on those that hold significant stakes in both companies as they are viewed as being most receptive to the "industrial logic" of the proposed deal.
These include BlackRock, which is the second-biggest shareholder in both HKEX and the LSE.
Capital Group, the third biggest shareholder in the LSE and fifth biggest in HKEX, is also viewed as a pivotal player.
Aberdeen Standard Investments and State Street Global Advisors are also shareholders in both companies.
The Hong Kong stock exchange tabled its bid for the LSE last Wednesday, sending shockwaves through financial markets. On Friday the LSE firmly rejected the "fundamentally flawed" offer, saying it saw "no merit in further engagement" with Hong Kong.
LSE bosses also confirmed the company would stick with its acquisition of Refinitiv, which it announced last month. Hong Kong had asked LSE to walk away from the deal as part of its offer, although it remains unclear whether HKEX would agree to pay any associated break fees.