Hong Kong Stock Exchange offers $36B for London counterpart

Sept. 11 (UPI) -- The Hong Kong Stock Exchange made an unexpected move Wednesday -- offering more than $36 billion to combine with the London Stock Exchange.

The Hong Kong exchange said the potential payment includes cash and a new credit facility, but stressed that its move is a possible offer rather than a firm, final bid.

The exchanges are two of the world's largest. Hong Kong's has a market capitalization of nearly $4 billion, compared to London's at $3.8 billion. They rank fifth and seventh, respectively.

"A combination of HKEX and LSE represents a highly forcing strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centers in Asia and Europe," Hong Kong Exchanges chairwoman Laura Cha Shih May-lung wrote in a filing.

The London Stock Exchange Group said the offer was "unsolicited, preliminary and highly conditional," and emphasized that it has already entered into an agreement to buy Rifinitiv, a global firm that provides market data.

"The Board of LSEG will consider this proposal and will make a further announcement in due course," it said in a statement, adding that shareholders will vote on the Rifinitiv deal in November.

Analyst Ronald Wan said completing the deal may be difficult, with Britain in the controversial process of leaving the European Union and continuing protests in Hong Kong.

"These are two major security exchanges in the world," Wan told Bloomberg. "A takeover from Hong Kong, a special administrative region of China, could be seen as a takeover from China. It won't be easy to clear all the regulatory hurdles. The deal is super politically sensitive."

Founded in 1571, the London Stock Exchange is one of the world's oldest

The Hong Kong exchange bought the London Metal Exchange in 2012, allowing it to enter commodities trading.