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Factbox: How the LSE and HKEX stack up

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(Reuters) - Hong Kong Exchanges and Clearing (0388.HK) (HKEX) has made an unsolicited $39 billion takeover approach for the London Stock Exchange (LSE.L) (LSE), with any offer contingent on the LSE ditching its acquisition of data company Refinitiv.

Here is some background on the two companies:

HISTORY AND MAIN OPERATIONS:

HKEX - HKEX describes its role as connecting mainland Chinese and global capital markets. It runs the Stock Exchange of Hong Kong, the Hong Kong Futures Exchange and in Britain, the London Metal Exchange, which it bought in 2012. HKEX was formed in 2000, but can trace its history back to 1891 and the establishment of the Stockbrokers’ Association of Hong Kong, the city’s first formal securities market.

HKEX launched “stock connect” in 2014, which allows Chinese investors to trade Hong Kong-listed shares, and international investors to trade shares listed in Shanghai and Shenzhen. It has become the main route for international investors into China. “Bond connect” launched in 2017.

LSE - The LSE traces its roots to listing market prices from a London coffee house in 1698.

Its main platform trades shares in companies from across the world. It also has a small derivatives trading platform, CurveGlobal, and a majority stake in LCH, one of the world’s biggest clearing houses for stocks, bonds and derivatives.

The LSE also runs Turquoise, which trades shares listed across Europe, recently setting up a hub in Amsterdam due to Brexit. The exchange also operates the FTSE Russell indexes business.

WHO’S IN CHARGE?

Charles Li - Li has been HKEX chief executive since 2010 and in 2018 was reappointed to the role until October 2021. Li was chairman of JPMorgan China (JPM.N) prior to joining HKEX and previously worked at Merrill Lynch China, and as an associate at law firms Brown & Wood and Davis Polk & Wardwell in New York, and as a journalist.

The Hong Kong government currently owns approximately 6% of HKEX and is its largest shareholder. The government must also approve six of the exchange’s 13 board members.

David Schwimmer - A former Goldman Sachs banker, Schwimmer became CEO of the LSE last year after Xavier Rolet left following a failed merger with Deutsche Boerse.  

Schwimmer said in June that big bang exchange mergers are hard given political opposition to opening up bourses to foreign ownership, leading to “painful failures”.

M&A

HKEX - HKEX’s acquisitions have most recently focused on technology companies. It completed the takeover of financial markets technology firm Shenzhen Ronghui Tongjin in July, and last week announced it had entered into a memorandum of understanding with Chinese insurer Ping An to explore areas of cooperation in fintech and data analytics. Its most significant acquisition in the past decade was the LME.

LSE - The LSE has failed a number of times to merge with Deutsche Boerse due to political and regulatory opposition. A planned deal with Canada’s Toronto Stock Exchange also collapsed in 2011 after a rival bid by Canadian banks.

The LSE agreed last month to buy financial information provider Refinitiv in a $27 billion deal aimed at offering trading across regions and currencies and establishing the British company as a rival to Bloomberg.

IN NUMBERS

HKEX’s market capitalization is around HK$310 billion ($39.5 billion). Its net profit surged 26% to a record high of HK$9.31 billion last year.

The LSE’s market capitalization is around 24 billion pounds ($29.6 billion). It reported an adjusted operating profit up 15% at 931 million pounds.

Compiled by Huw Jones in London and Alun John in Hong Kong; editing by Keith Weir and Jason Neely

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.