LME shareholders approve HKEx’s $2.2 billion takeover offer

Business Model

“The price is obviously good, but there is also sufficient reassurance for the members about business model and great growth opportunities,” LME Chairman Brian Bender told reporters. While “there is the formality of the FSA,” the U.K. regulator has raised no “red flag” so far, he said.

The LME has 70 shareholders, according to its website. At Hong Kong Exchanges’ offered price, JPMorgan’s stake is valued at 150.6 million pounds and Goldman’s 132.3 million pounds. Other investors include UBS AG, Barclays Plc, Deutsche Bank AG and Sucden Financial Ltd.

Sixty-seven shareholders voted at the meeting, with 64 in favor and three against, according to the LME. A total of 12.86 million shares were voted, with 12.82 million in approval.

“It’s a historic milestone for the exchange,” Michael Turek, a senior vice president at Newedge USA LLC in New York, who started in metals almost four decades ago, said before the vote. “I sense from some other people I talk to that there is an allure of being associated with a more robust growth area in the world at this time.”

Norsk Hydro

Mining companies Rio Tinto Group and Codelco, stainless steelmaker Outokumpu Oyj, commodity trader Glencore International Plc and aluminum producer Norsk Hydro ASA are among 31 metals producers, users and merchants that control a combined stake of 4.2 percent in the U.K. exchange.

“It’s an end of one era and start of a new one,” Michael Overlander, Sucden’s CEO and an LME director, told reporters in London. “I’m very happy to see it to be supported in such an overwhelming fashion.”

Hong Kong Exchanges agreed to maintain the LME’s contract structure and open-outcry trading, conducted at the bourse on Leadenhall Street in London’s financial district. The Asian exchange also will keep the existing warehousing network, help the LME develop its own clearinghouse and freeze trading fees until at least the start of 2015.

“The LME is a great platform for commodities trading, and there are a lot of synergies HKEx can bring forward,” said Dominic Chan, an analyst at BNP Paribas SA in Hong Kong who predicts stock in the Asian exchange will trade at HK$155.88 in 12 months. “This is a win-win situation longer term.”

A takeover by Hong Kong Exchanges may help the LME win more clients in mainland China, register warehouses in the country and clear products denominated in yuan, Bender said in a letter to shareholders July 9.

“It’s a clear vote, and we hope that the future of the LME is as good,” Gabriela Grillo, managing director of Duisburg, Germany-based trading company Wilhelm Grillo Handelsgesellschaft mbH, told reporters.

Bloomberg News

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