The board of the London Stock Exchange in Britain has unanimously rejected a takeover bid from the operators of the Hong Kong Stock Exchange (HKEX).

HKEX announced on Wednesday that it made a "proposal" to the board of LSE Group (LSEG).

This would have seen the two companies combined into one entity.

Under the proposal, HKEX would offer 2,045p (2,295c) in cash and 2.495 (2.800c) newly issued HKEX shares.

That values each London share at 8,361p (9,384c), the Hong Kong bourse said in its statement.

This would have meant a value for the entire London Stock Exchange, on the assumption that the listed share capital is made up of 354,471,415 shares, of approximately stg£29.6bn (€33.2bn).

But in a statement on Friday, LSE Group said: "The board has fundamental concerns about the key aspects of the conditional proposal".

It said these were strategy, deliverability, form of consideration and value.

"Accordingly, the board unanimously rejects the conditional proposal and, given its fundamental flaws, sees no merit in further engagement."

View of Hong Kong Exchanges and Clearing Ltd in Hong Kong | Image: Imaginechina/SIPA USA/PA Images

The LSEG also sent a letter to the HKEX, setting out the reasons for its rejection.

In the letter, LSEG chairman Don Robert said: "We were very surprised and disappointed that you decided to publish your unsolicited proposal within two days of our receiving it."

"We do not believe HKEX provides us with the best long-term positioning in Asia or the best listing/trading platform for China.

"We value our mutually beneficial partnership with the Shanghai Stock Exchange which is our preferred and direct channel to access the many opportunities with China."

He added: "We note that three-quarters of your proposed consideration is in HKEX shares, representing a fundamentally different and much less attractive investment proposition to our shareholders.

"We see the value of your share consideration as inherently uncertain.

"The ongoing situation in Hong Kong adds to this uncertainty.

"Furthermore, we question the sustainability of HKEX's position as a strategic gateway in the longer term."