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Ex-NYSE CEO: Hong Kong Exchange Makes Big Bet With LSE Offer

Jayson Derrick

The parent company of Hong Kong's stock exchange made an offer Wednesday to buy its London rival for $37 billion — "a lot of money," former NYSE CEO Dick Grasso told Fox Business in an interview.

What Happened

The Hong Kong Exchanges and Clearing company deserves credit for integrating both its transaction business and its clearance business, Grasso said in the interview.

The price tag it offered to pay is a "very big premium" compared to what the London Stock Exchange is worth, he said. Yet it would be reasonable to assume the executives behind the offer did their homework and identified synergies through cross-trading opportunities, he said. 

Why It's Important

The Hong Kong exchange is a top three or top four stock venue worldwide, so it would be a "logical move" to reach out and buy the LSE, Grasso said.

A "reverse pac-man" scenario could take place in which the LSE counters with an offer of its own to buy the Hong Kong company, he said. 

In the meantime, the ongoing Brexit uncertainty remains a "sideshow" as every exchange, including London, is a global venue, Grasso said. 

The ongoing protests in the streets of Hong Kong are unlikely to be a factor, as it is very likely the bid received final approval from Beijing, he said. 

What's Next

If the transaction succeeds, the combination of the Hong Kong and London exchanges under one parent company implies it could operate 24 hours a day, five days a week, Grasso said.

The deal "makes a lot of sense" regardless of which exchange buys out its rival, he said. 

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