London: Hong Kong Exchanges and Clearing Ltd made an unexpected $36.6 billion bid for London Stock Exchange Group Plc, a bold move that could upend the UK bourse’s combination with Refinitiv.

The offer faces several hurdles, as LSE’s board “remains committed to" the acquisition of data provider Refinitiv as it considers what it called an unsolicited, preliminary and highly conditional proposal.

LSE’s shares pared earlier gains, reflecting scepticism that a deal can be done in the face of escalating tensions with China over Hong Kong and the view that the $27 billion takeover of Refinitiv would allow LSE to push into financial data, offering a more secure future than a combination of stock exchanges. For HKEX, the deal promises a base away from the increasingly fraught political climate at home.

Under the proposed offer, HKEX would offer 2,045 pence as well as 2.495 newly issued HKEX shares for each LSE share. That values each LSE share at 8,361 pence, the Hong Kong bourse said in its statement. The UK firm’s stock rose 6.2% to 7,190 pence on Wednesday at 10:54am in London, after earlier surging as much as 16%. The Asian bourse operator had considered the “ambitious and far-reaching" deal for one of Europe’s largest exchanges for many months, HKEX CEO Charles Li said in a statement Wednesday.

LSE’s board said it would consider the proposal and will make a further announcement in due course.

The Refinitiv deal was a bet by LSE on a future dominated by data, as the three-century-old exchange looks for ways to extend its global reach. Acquiring Refinitiv, the former financial and risk unit of Thomson Reuters, would help the London bourse expand further into data analysis.

An HKEX-LSE pact would put an end to the Refinitiv purchase, instead creating a global trading power that would have stock, derivatives and commodities exchanges, as well as clearinghouses across two continents.

Both exchange operators have been involved in bourse merger deals in recent years, with LSE failing in its attempt to combine with Deutsche Boerse AG and HKEX acquiring London Metal Exchange in 2012 for 1.4 billion pounds.

LSE’s efforts to merge with Deutsche Boerse were ultimately scuppered by political considerations. HKEX’s proposed move could fall at the same hurdle, said Ronald Wan, CEO at Partners Capital International in Hong Kong. “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 politically sensitive."

UK business secretary Andrea Leadsom, speaking on Bloomberg Television, said British authorities would “look very carefully at anything that had security implications for the UK."

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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