London Stock Exchange Group PLC (LON:LSE) has rejected an unsolicited takeover bid from Hong Kong Exchanges and Clearing Limited (HKEX), citing “fundamental concerns” about the terms of the offer.

In a statement on Friday, the FTSE 100 group said various “flaws” in the offer including its “strategy, deliverability, form of consideration and value” had all raised red flags, and as a result the company’s board had decided to unanimously reject the proposal and saw “no merit” in further engagement.

READ: Hong Kong Exchange targets LSE with bid to scupper Refinitiv deal

In it’s rejection letter to HKEX, LSE also said that the share consideration offered by the Asian bourse, which would have seen LSE shareholders owning 41% of the newly combined group, was “unattractive” and was “much less attractive” than its US$27bn all-share merger with market data firm Refinitiv, which was announced in July.

The LSE twisted the knife by saying that the deal, which would have valued it at around £32bn, 26% higher than its current market cap, fell “substantially short” of an appropriate valuation for a takeover.

The group also scolded HKEX for making its proposal public only two days after the LSE had received it.

Responding to the rejection, HKEX said it continued to believe that a tie-up between the two firms represented a “highly compelling strategic opportunity” and said it would continue to engage with LSE shareholders so that they would be able to analyse the offer “in detail”.

HKEX swooped in with the surprise bid on Wednesday, offering LSE’s shareholders 2,045p in cash and 2.495 HEKX shares for each LSE share, implying a value of 8,361p.

The bid attracted scepticism from analysts across the City, with many citing the potential political risks to a merger between the Chinese and British exchanges amid ongoing trade tensions between the US and China.

Bid “always a non-starter”, says analyst

Commenting on the rejection, Markets.com’s Neil Wilson said HKEX’s bid was “always a non-starter” and that it was “no surprise” that LSE thought the bid undervalued the firm.

“Unattractive, offering a puny dowry and coming with volatile and unpredictable parents, HKEX never looked like the ideal bride”, Wilson said, adding the group was right to point out regulatory concerns with the bid.

He added that attention would now turn to whether a US firm would come in with a counter offer, with the current share price of around 7,300p indicating that there could be “some interest” from across the Atlantic.

In late afternoon trading, LSE shares were up 2.8% at 7,452p.

–Adds HKEX response and updates share price–