The London Stock Exchange (LSE) Group has rejected a takeover bid from Hong Kong Exchanges and Clearing (HKEX) in a hard-hitting letter to the Asian exchange’s board.

HKEX on Wednesday offered to take over one of Europe’s largest exchanges for £29.6 billion ($36.6 billion). However, the LSE said in a statement that it has concerns regarding key aspects of the “unsolicited, preliminary and highly conditional” offer.

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“The Board has fundamental concerns about the key aspects of the Conditional Proposal: strategy, deliverability, form of consideration and value. The board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no merit in further engagement,” the LSE stated in a letter to HKEX, signed by chairman Don Robert.

The letter was addressed to HKEX’s chairperson Laura Cha and chief executive Charles Li. It also said that the LSE was “surprised and disappointed” that the Hong Kong Exchange had published its proposal within a mere two days of making the LSE aware of its plans. It noted that the HKEX takeover plan had no strategic merit and would be considered a “significant backward step.”

In the letter, the LSE chairman also stressed that the bid offered by HKEX was not large enough.

“Even assuming your proposal were deliverable, its value falls substantially short of an appropriate valuation for a takeover of LSEG, especially when compared to the significant value we expect to create through our planned acquisition of Refinitiv,” Robert said. HKEX’s offer came just five weeks after the LSE announced its own deal, a merger with data group Refinitiv which is part of Thomson Reuters.

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Robert pointed out that the current political situation in Hong Kong makes any deal by the Asian hub’s exchange unattractive to LSE shareholders, as well as difficult to finalize in terms of legal approval by UK regulators.

“Your proposal would be subject to full scrutiny from a number of financial regulators, as well as governmental entities under, for example, the UK Enterprise Act […] There is no doubt that your unusual Board structure and your relationship with the Hong Kong government will complicate matters,” the letter stated.

Opinions differ as to what comes next. Hao Hong from Bank of Communications (BOCOM) told CNBC that the talks could continue until HKEX increased the bid. On the other hand, Neil Wilson from Markets.com told the Guardian that another suitor, possibly from the US, could turn up with a counter offer.

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