Shareholders of the London Metal Exchange voted in two venues on Wednesday to approve a £1,388 million ($2.15 billion) takeover bid by the Hong Kong Exchanges & Clearing Ltd., ending 10 months of debate on the sale of the exchange.
LME officials said more than 99% of the shares were voted for resolutions backing a scheme of arrangement for the takeover announced by HKEx and the LME in mid-June. The plan is now expected to become effective along with the closing of the acquisition in the fourth quarter following regulatory and court approval.
The acquisition will give the Hong Kong-based company control of the 135-year-old London-based exchange which trades an estimated 80% of the world’s nonferrous metal forward and option contracts. HKEx officials have said they will continue to operate the LME’s open outcry “Ring” in London with daily prompt date contracts, the existing membership structure and capacity for warehouse and physical delivery.
The combination is also expected to allow the LME to expand in Asia and China by establishing metals warehouse in China and moving into renminbi-based trading. China has recently accounted for more than 40% of world base metals consumption and 68% of production, according to officials of the two exchange companies.
“The deal with HKEx, Asia’s leading exchange, will secure the LME’s position as the world’s foremost metals trading venue,” Martin Abbott, chief executive of the LME and its parent company, said in a statement after the shareholder votes. “Our shared vision for global leadership in the commodities markets will allow us to respectfully build on the proud heritage of this unique institution.”
The LME has 70 shareholders according to information posted on its web site and at the HKEx offering price JPMorgan’s stake is valued at £150.6 million and Goldman Sachs’ at £132.3 million. Other major shareholders include Metdist Ltd., UBS Ltd., Sucden Financial, Newedge Group, Commerzbank AG, Amalgamated Trading Ltd., Barclays Bank, BNP Paribas Commodity Futures Ltd., Citigroup Global Markets Ltd., Credit Agricole Corporate and Investment Bank, Deutsche Bank AG, Koch Metals Trading Ltd., Macquarie Bank Ltd.. Mitsui & Co. Europe plc and Société Générale.
Bloomberg reported the New York-based INTL FCStone with 50,000 shares or 0.4% of the LME’s total 12.9 million shares was one of three shareholders voting against the agreement in a court meeting. Reuters also noted that there had been some opposition from industrial users, including German copper producer Arubis AG, the holder of 24,000 shares. The LME lists 31 metals producers holding a total of 4.2 percent of shares.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at email@example.com.