Hong Kong Exchanges and Clearing Limited (HKEX) said Wednesday it had made a proposal to the board of London Stock Exchange Group Plc (LSE) to "combine the two companies," in a deal which values the LSE at about £29.6 billion ($36.6 billion).

The HKEX said the deal would be funded by a combination of existing cash and a new credit facility. It cautioned, however, that its statement to the market should be considered as an announcement to make a possible offer and is not confirmation of a firm intention to bid.

The statement from HKEX said a further announcement will be made "as and when appropriate."

HKEX has proposed £20.45 a share in cash, as well as 2.495 newly issued HKEX shares. LSE shares rallied shortly after 10:00 a.m. London time, rising by 8.5% before giving up some of those initial gains.

In a subsequent conference call held for media and analysts, HKEX executives described the deal as a means of connecting trading and capital between East and West. They added the deal would create an 18-hour trading zone and also help the rise of the Chinese yuan as a globally-traded currency.

Charles Li, the chief executive of HKEX, played down any tension surrounding a Chinese firm taking control of a strategic U.K. brand with access to sensitive market information.

"We are not a Chinese company. We are not even a Hong Kong-only company. We are a global company," he said.