Hong Kong Exchanges and Clearing (HKEX) has dropped its bid for the London Stock Exchange (LSE). It faced a deadline of October 9 to raise its original bid, which had been rejected by LSE and will now not be able to make new bid for the coming six months.”The Board of HKEX continues to believe that a combination of LSE and HKEX is strategically compelling and would create a world-leading market infrastructure group,” HKEX said in a regulatory statement. “The Board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realizing this vision,” it added.

Calls for HKEX to raise its bid had faced opposition. “I will definitely oppose HKEX from raising its offer for the LSE as it will become too expensive,” said Christopher Cheung, a Hong Kong lawmaker for the financial services sector, and an HKEX shareholder. Cheung and about 500 local brokerages received shares of HKEX when it was listed in 2000. But HKEX failed to convince these shareholders about the merits of a higher takeover offer. Three shareholders of the London bourse had said they could be drawn into further discussions if HKEX raised its offer price by 20% and increased the cash component. “The deal is full of uncertainties as we do not know if the regulators in the UK, U.S. and Europe will approve it, and we do not know if the combination of the two exchanges will work out smoothly,” said Cheung, who is also the Founder and Chief Executive of Christfund Securities.

HKEX on September 11 surprised the market by proposing to pay GBP83.61 per LSE share in cash and stock for the London bourse operator, valuing it at GBP29.6 billion. It was the most expensive exchange takeover offer and could have created a giant exchange that would span Asia, Europe and America. The LSE immediately rejected the unsolicited approach, saying it faced regulatory hurdles and did not make strategic sense. But HKEX had not given up and hired HSBC and UBS to lobby the shareholders of LSE directly.

“Like many shareholders, I do not feel the current offer on the table from HKEX for the LSE fully reflects the value and future potential earnings the combined entity would likely achieve. That said, were we to see a revised headline price and an improvement in the cash component from HKEX, that would likely catch the attention of LSE shareholders,” Guy de Blonay, Manager of the Jupiter Financial Opportunities Fund and a major LSE shareholder said, before HKEX decided not to raise its offer, the South China Morning Post reports.