The surprise bid was published Wednesday, suggesting that LSE received the offer on Monday.
The transaction posed serious risks and lacked value for shareholders, Robert said in a letter addressed to the chairperson and CEO of HKEX.
HKEX’s relationship with the Hong Kong government would “complicate matters,” making it “highly uncertain” that necessary approvals would be obtained, Robert said.
The Hong Kong government directly appoints half of the HKEX board, according to its website. And the chairman’s appointment must be approved by Hong Kong’s chief executive, Carrie Lam.
For shareholders, the proposition was unattractive given that they would be paid mostly in HKEX shares, Robert said.
“We see the value of your share consideration as inherently uncertain. The ongoing situation in Hong Kong adds to this uncertainty. Furthermore, we question the sustainability of HKEX’s position as a strategic gateway in the longer term,” Robert said.
The proposal would be a “backward step” for LSE strategically, given the high geographic concentration of HKEX’s portfolio.
“We do not believe HKEX provides us with the best long-term positioning in Asia or the best listing/trading platform for China. We value our mutually beneficial partnership with the Shanghai Stock Exchange which is our preferred and direct channel to access the many opportunities with China,” Robert said.
Even if the proposal were deliverable, its value fell “substantially short” of an appropriate valuation for a takeover of LSE, “especially when compared to the significant value we expect to create through our planned acquisition of Refinitiv,” he said.