The Hong Kong Stock Exchange on Tuesday dropped its multibillion-dollar takeover bid for the prized London Stock Exchange Group, which would have created a global markets titan.

Hong Kong Exchanges and Clearing Limited (HKEX) made the shock proposal for LSEG on September 11, but LSEG formally rejected the offer the following day citing “fundamental” flaws and concerns over its ties to the Chinese city’s government.

The huge cash-and-shares bid, which was worth £32 billion ($40 billion, 36 billion euros), was dependent on the axing of LSEG’s planned purchase of US financial data provider Refinitiv.

HKEX chairman Laura Cha said at the time of the offer that it represented a “compelling” opportunity and would bring together the largest and most significant financial centers in Asia and Europe.

However, the owner of the London and Milan stock exchanges unanimously rejected the bid, saying it fell “substantially short of an appropriate valuation for a takeover.” It also said it remained committed instead to its $27 billion acquisition of Refinitiv.

‘Disappointed’

HKEX said in a statement Tuesday that it was “disappointed” to pull its bid but that it was in the best interests of shareholders to do so.

“HKEX confirms that it does not intend to make an offer for LSEG,” the statement added.

“The board of HKEX continues to believe that a combination of LSEG and HKEX is strategically compelling and would create 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.”

Shares in Hong Kong Exchanges and Clearing rose almost three percent on Tuesday.

Chief executive Charles Li said in a blog post published on Tuesday: “I need to be rooted in our day-to-day business but forward-focused, certain that if we try something and it doesn’t work, we are strong enough and diverse enough to dust ourselves down and move forward.”

He added: “We are honest with ourselves too – as we know some things we try will not develop at the speed which we would like or, in some cases, at all. Our goal is to keep moving forward, reinforcing HKEX’s role and building Hong Kong’s strength as a financial market.”

Hong Kong lawmaker and HKEX shareholder Christopher Cheung criticised the unsolicited takeover bid, telling Bloomberg News the “whole offer was a farce.”

“When HKEX announced the offer, I thought they’ve already had discussions with London Stock Exchange and their regulators.

“It turns out they have not. HKEX now must address the danger of stagnant business growth.”

In morning London deals, LSEG shares sank 6.07 percent to stand at £70.

Since the HKEX unveiled its takeover offer last month, LSEG stock has held stubbornly below the bid level – which stood at more than £83 per share – as investors remained unconvinced.

“A concerted charm offensive failed to pay off for the Hong Kong group as investors balked at the anti-trust, regulatory and deliverability issues that the tieup implied,” noted Markets.com analyst Neil Wilson.

“And, not least, LSEG is fully committed to the Refinitiv deal.”

Refinitiv will help shift LSEG from generating revenue solely from the trading of securities to providing investors information about trading, which will put it in direct competition with data and financial news firm Bloomberg.

The transformational Refinitiv deal comes two years after LSEG’s failed £21-billion merger with Germany’s Deutsche Boerse.

That proposal – the third failed attempt at a tieup between the British and German stock exchange operators – was blocked by the European Commission on competition fears.