Hong Kong Stock Exchange to Buy LME for US$2.15 billion
The Hong Kong stock exchange said Friday it had entered into an agreement to buy the London Metal Exchange (LME) for a total of GBP1.39 billion (US$2.15 billion).
Hong Kong Exchanges and Clearing (HKEx) said its bid for the 135-year-old LME Holdings would allow it to “develop its own commodity offering and to diversify its revenue sources”.
“The acquisition of LME Holdings represents a unique opportunity for us to acquire in one stroke a position of global leadership in the commodities market,” HKEx Chief Executive Charles Li said in a statement.
“This is consistent with our strategy to expand beyond equities and equity derivatives and offers significant opportunities for revenue growth.”
“HKEx brings a unique ability to help the LME grow its business in Asia and, particularly, China and we will capitalise on this to deliver value for all our stakeholders.”
LME Chief Executive Martin Abbott added the deal would “secure the future of the LME for its next 135 years”.
“The LME’s global benchmarks plus HKEx’s pre-eminent market position in Asia, its IT and trading resources and clearing expertise will cement the LME’s position as the world’s foremost base metals trading venue,” he said.
The LME said the board intends to “unanimously recommend” that shareholders approve the transaction at a meeting that would be convened before the end of July.
The offer for Europe’s last open outcry exchange will be financed with cash and GBP1.1 billion in bank loans, HKEx said. It values the LME at GBP107.60 a share.
LME is the world’s largest exchange trading nonferrous metals, including copper and aluminium, while HKEx is the world’s biggest exchange operator by market value.
The offer must be approved by Britain’s Financial Services Authority.