Hong Kong Exchanges & Clearing Ltd. abruptly dropped its 29.6 billion-pound (US$36.4 billion) unsolicited takeover bid for London Stock Exchange Group Plc after a sharp rebuke from the U.K. company and a consistent thumbs-down from shareholders.

LSE shares, which traded below HKEX’s 8,361-pence offer since it was announced Sept. 11, dropped as much as 6.5 per cent in London morning trading.

The decision is a rare setback for HKEX Chief Executive Officer Charles Li, who saw London at the center of trading between Eastern and Western markets. The withdrawal leaves LSE free to pursue its US$27 billion takeover of Refinitiv, taking the 300-year-old bourse further away from a traditional exchange model and deeper into big data.

Li said Tuesday that the “vision for the business looking forward is to build upon the role we already play in Hong Kong, China, Asia and more widely.” A spokeswoman for LSE declined to comment.

Before Tuesday’s about-face, the region’s largest exchange by revenue struggled to regain momentum after last month’s stinging rebuke from LSE’s board. HKEX executives met LSE shareholders in London and New York to try to gain their backing for the takeover plan. The bourse also was in talks to borrow as much as 8 billion pounds to fund the purchase.

While the HKEX’s board continues to see a combination as “strategically compelling,” it’s “disappointed that it has been unable to engage with the management of LSEG in realizing this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal,” the exchange said in a filing on Tuesday.

With the takeover offer pulled, “HKEX should resume its focus on strategic initiatives linking mainland China’s capital markets with Hong Kong,” Bloomberg Intelligence analyst Sharnie Wong said in a research report Tuesday morning.

Li’s LSE counterpart, David Schwimmer, has said he preferred direct access to China and didn’t need the former British colony as a conduit. LSE last month rejected HKEX’s initial takeover proposal, citing complications ranging from political unrest in Hong Kong to potential problems with regulators.

HKEX countered with a charm offensive, bringing in UBS Group AG and HSBC Holdings Plc to try to persuade shareholders of the merits of its proposal, Bloomberg reported.

“The whole offer was a farce,” Christopher Cheung, a Hong Kong lawmaker and HKEX shareholder, said in phone interview. “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.”

Exchange companies have tried and failed to combine in recent years, as political, regulatory and economic considerations have foiled the efforts. LSE’s attempted merger with Germany’s Deutsche Boerse AG was ultimately abandoned, and Singapore Exchange Ltd.’s bid for ASX Ltd. was rejected by Australian regulators in 2011 because of national interest concerns.

Consolidation Predicted

Despite the fumbles, analysts and observers have long predicted that the global exchange sector will consolidate. And there have been successful deals, including HKEX’s acquisition of the London Metal Exchange and Intercontinental Exchange Inc.’s purchase of the New York Stock Exchange.

Read more: Ex-LSE CEO says global exchange consolidation is ‘inevitable’

“The complicated regulatory, technical and technological landscape in which we operate means we are resolutely focused on our ambitions, whilst also maintaining flexibility in our approach,” Li said in a blog post Tuesday.

HKEX knows “some things we try will not develop at the speed which we would like, or in some cases, at all,” Li said. “Our goal is to keep moving forward, reinforcing HKEX’s role and building Hong Kong’s strength as a financial market.”