(Yicai Global) Oct. 8 -- Hong Kong Exchanges and Clearing has pulled the plug on its USD39.2 billion bid for London Stock Exchange Group after nearly a month of talks with shareholders failed to move the unsolicited offer forward. LSEG's shares fell.

Abandoning the takeover proposal was in its own shareholders' best interests, the operator of the Hong Kong bourse said in a statement today, but added that it still believes the merger would be strategically compelling and result in a world-leading market infrastructure group.

"Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realizing this vision," it said.

HKEX announced on Sept. 11 that it hoped to buy LSEG with cash and new shares to create a financial markets superpower worth USD70 billion. Despite an almost 23 percent premium at the time, two days later LSEG said that its board was unanimously rejecting the offer and saw no merit in further discussions.

The offer was not in line with the London Stock Exchange's strategic objectives; there were serious concerns about deliverability; HKEX's stock considerations were unattractive; and the valuation was "substantially" below par, the British exchange said.

LSEG is pursuing its own USD27 billion takeover of financial data provider Refinitiv. A merger with the HKEX was only possible if LSEG put aside that deal, HKEX Chief Executive Charles Li had said earlier.

Shares of LSEG [LON:LSE] were 4.75 percent lower at GBP7,098 (USD8,690) each as of 11.19 a.m. local time in London.

Hong Kong is the world's fifth-largest stock exchange by market capitalization, according to the latest data from the World Federation of Exchanges. Its listed companies have a combined cap of USD3.94 trillion, while the LSE ranks seventh at USD3.77 trillion.

Editor: James Boynton