Reuters

Hong Kong Stock Exchange on Wednesday said it was offering to buy the London Stock Exchange for about $36.6 billion.

The Hong Kong exchange has until October 9 to make a firm offer or pull its proposal if it does not intend to make it, the firm said in a statement.

Together, the two stock exchanges would be worth more than $70 billion, it said. The LSE said its board would consider the proposal.

LSE recently agreed to pay $27 billion for the data company Refinitiv, which the LSE on Wednesday said it was committed to. The Hong Kong exchange, however, said its offer would be contingent on the LSE dropping the Refinitiv purchase.

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Hong Kong Stock Exchange says it's proposing to buy the London Stock Exchange Group for $36.6 billion.

The Hong Kong exchange, or HKEX, announced the plan on its website Wednesday morning, the result of what it said was "early engagement" with the London Stock Exchange. A tie-up would create an exchange giant with a combined value of more than $70 billion, it said.

"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," HKEX CEO Charles Li said in a statement.

"We are early in the process so I can't go into too much detail at this stage, but after many months of consideration we believe we have put forward a proposal that is ambitious, far-reaching, and could have a transformative effect on global financial markets."

The London Stock Exchange said its board would "consider this proposal and will make a further announcement in due course."

The London Stock Exchange Group recently announced that it agreed to buy the data company Refinitiv in a deal worth $27 billion. HKEX said in a statement that its offer was subject to the group's shareholders voting down the deal or the group dropping its bid for Refinitiv.

"LSEG remains committed to and continues to make good progress on its proposed acquisition of Refinitiv," LSEG said in a statement.

The offer, worth an estimated 8,361 pence per LSEG share, represents a premium of about 23% to LSEG's closing share price on Tuesday, the day before the offer was announced, HKEX said.

HKEX is offering 2,045 pence in cash and 2.495 newly issued HKEX shares for each LSEG share, valuing LSEG at about £29.6 billion, or $36.6 billion.

LSEG stock surged 6.5% on the news.

HKEX has until October 9 to make a firm offer, the exchange said.

Li said on HKEX's website that the merger "will create a world-leading global exchange that spans Asia, Europe and the United States."

He added: "Together, they would provide an unprecedented market connectivity platform for global market participants, unleashing a new generation of opportunities on the world's first truly global exchange."

Stock exchanges have been facing headwinds from alternative trading venues and new regulation. LSEG has faced a graveyard of past merger attempts — from Intercontinental Exchange and its German rival Deutsche Boerse.

Both the LSE and the Hong Kong exchange are in cities where political upheaval threatens their businesses. The LSEG is expected to lose out on what could have been one of its biggest prizes, the monster listing of the Saudi oil giant Saudi Aramco, while Alibaba delayed its initial public offering in Hong Kong over unrest in the city.

HKEX owns the London Metal Exchange.

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