By Francesca Freeman
LONDON--Hong Kong Exchanges and Clearing Ltd. (0388.HK) has
secured approval from London Metal Exchange shareholders to acquire
the exchange, the LME said Wednesday.
The company's all-cash offer, worth 1.388 billion pounds ($2.150
billion), received approval from shareholders representing 99.63%
of LME shares, the LME said. The deal is slated to complete in the
fourth quarter and is subject to the approval of U.K. regulator the
Financial Services Authority.
The allure of improved access to Asia, particularly the world's
biggest consumer of metals, China, was key to the LME's original
decision to pick Hong Kong Exchanges as its preferred bidder,
following an auction process lasting several months.
Hong Kong Exchanges fought off tough competition from a number
of other industry players to finally secure its position as
preferred bidder last month. Both CME Group Inc. (CME) and NYSE
Liffe, the London-based derivatives arm of NYSE Euronext (NYX),
were eliminated from the bidding process in May.
IntercontinentalExchange Inc. (ICE) was knocked out of the frame in
the final stage.
Hong Kong Exchanges has said it will support the development of
the LME's own clearing house, LME Clear, which is designed
specifically to meet the needs of LME members. It also said it
plans to support the LME in expanding its warehouse network in
Asia, increase the number of mainland Chinese participants and
clients, and enhance market data distribution and connectivity into
Asia.
Hong Kong Exchange meanwhile plans to retain the LME's existing
business model. This includes open-outcry trading in the ring,
daily prompt-date contracts, membership structure and capacity for
warehousing and physical delivery. It will not increase fees for
contracts currently traded on the LME before Jan. 1, 2015.
The LME will remain based in London as a regulated investment
exchange, under supervision of the Financial Services
Authority.
The current LME Chief Executive, Martin Abbott, will stay on
after the deal closes and most of the management team will remain
in place.
Write to Francesca Freeman at francesca.freeman@dowjones.com
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