Hong Kong Exchanges and Clearing has made an unsolicited $39 billion takeover bid for the London Stock Exchange, an offer contingent on the LSE ditching its acquisition of data company Refinitiv.
The combination would help both exchanges compete better with rivals like ICE and CME from the United States. The LSE has long sought to bolster its presence in Asia and recently launched a link with HKEX rival Shanghai.
"The board of HKEX believes a proposed combination with LSEG represents a highly compelling strategic opportunity to create a global market infrastructure leader," the Hong Kong exchange, HKEX, said in a statement on Wednesday.
In response to HKEX's announcement, the LSE said it was committed to and continues to make good progress on its proposed acquisition of Refinitiv.
The takeover bid by the Honk Kong company comes as Britain is set to leave the European Union, a step some politicians fear could weaken its large financial sector.
HKEX, which already has a base in London as owner of the London Metal Exchange, said it had played a key role in underpinning the City of London's position as a pre-eminent global centre for metals trading.
"HKEX is fully committed to supporting and building the long term roles of both London and Hong Kong as global financial centres," it added.
The proposed 31.6 billion pounds cash-and-share transaction would only go ahead if the LSE's proposed takeover of Refinitiv does not proceed, HKEX said. The LSE announced in August that it has agreed to buy Refinitiv in a $27 billion deal aimed at transforming the exchange into a market data and analytics giant.
Refinitiv and its majority shareholder Blackstone had no immediate comment.
It is expected that key LSE management would continue to operate LSE businesses, HKEX said.
The Honk Kong approach is the latest international attempt to acquire the LSE - Germany's Deutsche Boerse has failed three times in recent years, hitting opposition from politicians and regulators.
LSE CEO David Schwimmer has said that big bang takeovers in exchanges are difficult due to political concerns and in recent years the LSE has sought to diversify away from basic trading and clearing to data and analytics.
The Asian exchange, however, signalled it was confident the takeover faced no major regulatory hurdles due to little overlap in markets.
HKEX said it has already begun discussions with certain regulators in Britain and Hong Kong.
"The board of HKEX believes that the two businesses are highly complementary and as such, looks forward to working with the relevant authorities to deliver a clear path to completion," the HKEX said.
LSE shares jumped 8.7% to 7,400 pence.
HKEX said that under the terms of the deal, LSE shareholders would receive 2,045 pence in cash and 2.495 newly issued HKEX shares.
Laura Cha, chairman of HKEX, said the combination of the two exchanges represents a "highly compelling strategic opportunity".
HKEX said it intended to apply for a secondary listing of its shares on the LSE once the deal has gone through.