Bourse operator Hong Kong Exchanges and Clearing’s surprise US$36.6 billion offer to acquire the three century-old London Stock Exchange has boosted mergers and acquisitions activity in the city to a two-year high, data provider Refinitiv said. The stock and cash offer, made on September 11, was rejected two days later , but has been included as a proposed deal by Refinitiv. With the inclusion of LSE’s net debt, the deal could amount to US$37.3 billion, and if it were to go through, will be the biggest stock exchange merger in history, as well as the largest M&A deal in Hong Kong this year. “The deal between HKEX and LSE will not go through easily, as there are a lot of political implications that might stifle it,” said Clement Chan Kam-wing, managing director of accounting firm BDO. “Just like IPOs, there seems to have been a revival in M&As due to a more positive outlook for a US-China trade deal. However, it could quickly turn around, if there is any sudden bad news,” Chan said. He said the market was still very shaky and fluid, and the outlook for M&As depended on developments in US-China trade negotiations “primarily”, and – to a lesser extent – on the Brexit situation. While LSE rejected the offer and said it preferred to partner with the Shanghai Stock Exchange, Bloomberg reported that HKEX had not given up hope, and had hired lenders UBS and HSBC to lobby the London exchange’s investors. The proposed merger will come under financial M&As, which accounted for about 39 per cent of all such deals in Hong Kong, in terms of value, in the first nine months of 2019. Financial M&As in this period amounted to US$47.6 billion, an increase of 360 per cent from a year ago. M&As involving the real-estate sector were in second place, with about 16.6 per cent of total deal value. Such deals amounted to US$20.1 billion. Industrials ranked third with a 10 per cent share. Hong Kong’s bold bid for London Stock Exchange faces scrutiny of global regulators Overall M&A activity involving Hong Kong companies rose 41.8 per cent year on year to US$121.2 billion in the first nine months of this year, for the strongest first nine-month period since 2017, when such deals amounted to US$137.3 billion.