UPDATE: CME Group Eliminated From LME Sale Process - Sources
22 Maggio 2012 - 1:49PM
Dow Jones News
CME Group Inc. (CME) has been eliminated from the sale process
to buy the London Metal Exchange after being given more time to
come up with a higher priced offer, leaving just two bidders in the
frame to acquire the 135-year-old exchange, people familiar with
the matter told Dow Jones Newswires Tuesday.
Rival exchanges IntercontinentalExchange Inc. (ICE) and Hong
Kong Exchanges and Clearing Ltd. (0388.HK) are the final candidates
in the running to buy the world's biggest metals trading exchange,
the people said. The LME eliminated NYSE Liffe, the London-based
derivatives arm of NYSE Euronext (NYX), from the sale process May
11.
Both CME Group and the LME declined to comment.
The exchange's adviser, global investment bank Moelis & Co.,
had spent several days last week in talks with the remaining three
parties. The LME board met late Friday to discuss the situation,
and gave CME Group time to come back with an improved bid and put
itself back in the auction process.
Discussions between Moelis and the bidders centered on the value
of their bids, each of which remain unclear, although analysts have
said offers could be around at least GBP1 billion. The three
remaining bids were relatively similar in assurances related to
continuity of the existing LME business but varied in terms of
price, people familiar with the matter said, with Moelis seeking to
narrow the spread between the offers.
Moelis is being paid a GBP3.5 million fee on completion of the
bidding process plus would earn between 0.5% and 0.7% of the final
sale price if a deal goes ahead.
Firms bids were received for the LME May 7, with Moelis and the
LME bid committee--Chairman Brian Bender, Chief Executive Martin
Abbott and board directors David Rough and Nat le Roux--having
first sight of the offers. The LME board had its first meeting to
discuss the bids May 10.
The LME is central to the global trade of industrial metals,
being the world's largest metals exchange and accounting for at
least 80% of trade in nonferrous metals such as copper and
aluminum.
A sale isn't guaranteed, however. A successful bidder would
first need to allay concerns among holders of the LME's ordinary
shares, who are also its members, about potential changes to
exchange operations that could hurt their profitability. The deal
would also need to be priced at a high enough level to entice
members to part with their stakes.
The LME suspended its 2011 dividend payment while it awaits the
outcome of the sale process. Any sale needs approval from 75% of
shareholder votes and 50% of LME members.
The exchange reported net profit of GBP7.68 million in 2011,
down 19% from GBP9.45 million in 2010.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413;
andrea.hotter@dowjones.com
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