The plan by Hong Kong Exchanges & Clearing Ltd to take over London Stock Exchange Group Plc is running into multiple obstacles a day after the surprise bid was launched, with the UK bourse leaning towards rejecting the offer in its current form.
LSE and its advisers have wide-ranging concerns, including the possible influence of China on the HKEX, and the deal could face pushback from UK and US officials over security concerns, according to people familiar with the matter. LSE is also wary of a bid that is structured mainly in stock and has exposure to the volatile situation in Hong Kong, the people said.
The Asian bid also faces scepticism from LSE’s British-based shareholders. Jupiter Asset Management and Aberdeen Standard Investments indicated they prefer the British bourse’s planned takeover of Refinitiv – a strategic move to expand in data that HKEX wants to scrap. HKEX shares fell as much as 3.8%, while LSE is trading at about 14% below the offer price.
“Scepticism abounds around the likelihood of the UK regulator approving this deal,” said Guy de Blonay, a fund manager at Jupiter, which holds about 0.7% of LSE’s equity. There’s “also an uncertain appetite to receive HKEX paper. At this stage, there is arguably greater long-term value in the Refinitiv deal than in the HKEX proposal.”
Representatives for LSE and HKEX declined to comment.

Shares whipsawed
LSE stock initially jumped as much as 16% after HKEX said it wanted to combine the exchanges in a cash-and-stock deal that valued the London firm at £29.6bn ($36.6bn). However, the stock pared gains amid doubts over how shareholders and regulators will react.
While the takeover represents a vote of confidence in London as a post-Brexit financial hub, the British government has the power to scrap the deal on public-interest grounds.
“The London Stock Exchange is a critically important part of the UK financial system, so as you would expect, the government and the regulators will be looking at the details closely,” said a spokesperson for the UK government on Wednesday. “We cannot comment further on commercial matters.”
With global political tensions rising  including protests in Hong Kong and US President Donald Trump’s trade war with China – commercial arguments may not be the most compelling, especially given the LSE’s prominence as the world’s biggest venue for handling interest-rate swaps. US regulators last year rejected a bid by a Chinese-linked consortium to take over the Chicago Stock Exchange, a deal that then-candidate Trump blasted when it was announced in 2016.
LSE senior managers were blindsided by the offer, said another person familiar with the situation, who asked not to be named discussing matters that aren’t public on Wednesday. Internally, recent meetings have concentrated on the significant benefits of the Refinitiv deal, the person said.
Rhona Millar, an investment analyst at Aberdeen Standard Investments, which is a top 15 LSE shareholder, echoed de Blonay’s misgivings. “Shareholders who previously welcomed the proposed acquisition of Refinitiv will be seeking assurances that the strategic rationale will not be undermined by a successful bid for LSE,” she said.