The operation has many challenges, both strategic and political, in full Brexit and in full social protest against Beijing.
For nearly twenty years, the London Stock Exchange (LSE) – the operator that manages the London Stock Exchange but also that of Milan – has easily rejected countless attempts to buy. From then on, the irruption of a new suitor could have appeared of a great banality. However, the City has, this time, the blow when the Hong Kong Exchange and Clearing (HKEX) – which manages the Hong Kong Stock Exchange – announced Wednesday, September 11, that it was considering a "Possible offer" Unsolicited valuing its competitor at 32 billion pounds (36 billion euros).
The Asian group has proposed to the LSE Board of Directors "Combine" both companies in order to create a "World leader in market infrastructures", in front of the Americans ICE (IntercontinentalExchange) and CME (Chicago Mercantile Exchange). At this announcement, the action of the LSE was packed Wednesday, before closing up 6% to 72 pounds, well below the 83 pounds that the potential buyer is willing to pay: proof that the operators of markets doubt that the operation can be completed.
The "Wimbledon effect"
For once, it is not the price that is generating debate, at this stage, but the political background. This buy-out proposal came at a time when the former British colony was the scene of a historic social protest to preserve its democracy in the face of Beijing's interference. Knowing that with 6% of the capital the government of the island is the first shareholder of HKEX.
Meanwhile, the United Kingdom, entangled in the throes of Brexit, lives in strong political turmoil. If HKEX files its bid, the government of Boris Johnson will have to navigate between a public opinion that never digested the acquisition of Cadbury, in 2009, by the American Kraft and the need to find new allies in the international concert. Becoming China's financial hub in Europe, as proposed by HKEX, can it justify the British losing control of their main market infrastructure?
For a long time, the United Kingdom, a champion of market freedom, has let foreign predators swallow its industrial or financial enterprises without flinching. In 2012, HKEX also got its hands on the venerable metal market, the LME (London Metal Exchange). The City theorized then"Wimbledon effect" : Just as the field tennis tournament did not need a local champion to be a success, the London financial center did not care that the Kleinwort and other Warburg banks are flying the US or Swiss flag, considering that the important was that jobs stay on the banks of the Thames.