-- Shareholdings representing 99.63% of LME shares approve Hong
Kong Exchanges' bid for the LME
-- Deal expected to complete in the fourth quarter
(Adds shareholder comment, further detail.)
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, subject to
the approval of U.K. regulator the Financial Services
Authority.
"The deal with HKEx, Asia's leading exchange, will secure the
LME's position as the world's foremost metals trading venue," said
LME Chief Executive Martin Abbott.
Gavin Prentice, managing director of LME ring-dealing member
Marex Spectron Ltd., told Dow Jones Newswires that he was
"delighted" with the result of the vote.
"The overwhelming support of the shareholders demonstrates that
the tie up with the HKEx is indeed good news for the LME, its
members and users. The opportunities afforded us going forward,
especially in Asia, are very exciting," he said.
Marex Spectron holds a 2.32% stake in the LME.
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 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 won't increase fees for
contracts currently traded on the LME before Jan. 1, 2015.
"Our shared vision for global leadership in the commodities
market will allow us to respectfully build on the proud heritage of
this unique institution," said Hong Kong Exchanges Chief Executive
Charles Li. "HKEx's ability to help the LME grow its business in
Asia and beyond provides significant opportunities for both parties
and will deliver value for all of our stakeholders," he said.
The LME will remain based in London as a regulated investment
exchange, under supervision of the Financial Services Authority. A
representative for the FSA declined to comment on Wednesday's
shareholder vote.
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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