LONDON METAL EXCHANGE
ICE and NYSE Euronext – vied to buy this prized asset. At the initial stages of the tender process up to 12 entities were rumoured to be interested. HKEx’s attitude, positioning and deep pockets won the day with Chief Executive Charles Li claiming, “Our shared vision for global leadership in the commodities market will allow us to respectfully build on the proud heritage of this unique institution.” The real success of the deal was in ensuring that
the £1.388 bn (US$2.2 bn) proposal that was put to shareholders was, despite their diverse nature, received with enthusiasm, resulting in an approval level of 99.8% – the highest ever achieved in any UK Scheme of Arrangement and clearly reflecting the overwhelmingly persuasive price tag. Having received Financial Services Authority
approval last month, the acquisition of the entire issued ordinary share capital of LME Holdings by HKEx has completed on December 6th
bringing
together the leading operator of exchanges and clearing houses in Asia, with the world’s leading non-ferrous base metals trading venue. With a much higher price-tag than anyone
expected, perhaps there was a collective sense among shareholders that they wouldn’t see
anything like it again, with the sale delivering huge windfalls to a number of banks and brokers. At £1.4 bn, HKEx is paying a multiple of some 180 times last year’s LME earnings. The transaction has catapulted HKEx – whose
focus has until now been almost exclusively on equity-based business – into the big league of commodity exchanges, challenging established players such as CME Group and ICE for dominance in commodity physicals and derivatives. The acquisition also assist HKEx in diversifying its revenue streams as it seeks to become more multi- asset revenue driven.
While the growth of LME trading remains healthy it cannot continue to be taken for granted
That the price tag includes an opportunity
premium is in no doubt. As Mr. Li commented, “The acquisition ... represents a unique opportunity for us to acquire in one stroke a position of global leadership in the commodities market. This is consistent with our strategy to expand beyond equities and equity derivatives and offers significant opportunities for revenue growth. HKEx brings a
MINING IN A DAY
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