The Hong Kong stock exchange launched a surprise £31.6 billion (Dh143.4bn) bid for the London Stock Exchange Group (LSEG).
In a statement, Hong Kong Exchanges and Clearing (HKEX) said the proposed deal would "create a world-leading market infrastructure group with a global footprint", and would connect established financial markets in the West with emerging markets in the East.
It also said the deal would "reinforce Hong Kong's position as the key connection between mainland China, Asia and the rest of the world". Customers of the combined group would have access to markets in Hong Kong, London, Milan and mainland China.
“We believe a combination of HKEX and LSEG represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe," said Laura Cha, chairman of HKEX.
"Following early engagement with LSEG, we look forward to working in detail with the LSEG Board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses."
The bid, a mix of cash and shares, equates to around £83.61 per share for London Stock Exchange's shares, a 22.9 per cent premium on London Stock Exchange's closing price on Tuesday.
London Stock Exchange's shares jumped by 6 per cent on news of the takeover and were trading at £72.04 at 6.08pm UAE time on Wednesday.
The London Stock Exchange last month announced its own plan to acquire Refinitiv, the former financial and risk business of Thomson Reuters, in a $27bn deal.
However, HKEX said in its offer to LSEG's shareholders that a deal was dependent on its Refinitiv offer not proceeding.
Three years ago, London Stock Exchange agreed a "merger of equals" with Germany's Deutsche Bourse in a €29bn deal in an attempt to create a European markets powerhouse. The merger was announced before Britain voted to withdraw from the European Union, but the deal was scuppered by the EU a year later due to competition concerns.
A Bloomberg Intelligence note on HKEX's bid for the LSEG stated that if it were to succeed, it would create the world's largest exchange, leapfrogging the Chicago Mercantile Exchange which is home to much of the world's futures and options trading. It also said a deal between the two exchanges would be less likely to face the kind of regulatory hurdles that eventually scuppered the merger with Deutsche Bourse.
