The HKEX proposed buying the London exchange to create a combined company worth about $70 billion.
“Accordingly, the board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no merit in further engagement.”
The board also said it remained “committed to and continues to make good progress” on its purchase of Refinitiv.
“Regulatory approval processes are under way and a circular is expected to be posted to LSEG shareholders in November 2019 to seek their approval of the transaction,” it said, adding that the transaction “remains on track” to close in the second half of next year.
The LSE board also attached the letter it sent to the HKEX’s board, saying that it was “surprised and disappointed” that it made its “unsolicited proposal” public just two days after sending it to the LSE.
It added that the Refinitiv deal was a major driver of the rejection, describing it as “a transformational transaction, strategically and financially,” and saying that “since the Refinitiv announcement, the LSEG share price is up c.29%, a value increase of c.£5.8bn.”
The letter also detailed four key aspects the LSE felt were lacking from the proposal — notably that the valuation fell short, that the HKEX share consideration wasn’t attractive to shareholders, and that the pushback from financial authorities and the government “would pose serious risk for our shareholders.”