Hong Kong Exchanges & Clearing (HKEx) has won the race to acquire the London Metal Exchange (LME), beating out rival shortlisted contender IntercontinentalExchange (ICE) with a £1.39 billion offer.
The offer of £107.6 a share will will need to be agreed by more than 75% of LME shareholders and approved by the Financial Services Authority before the deal can be finalised.
The acquisition gives HKEx a firm footing in the commodities business, and offers the LME a platform for expansion into the Asian markets, particularly China.
Martin Abbott, chief executive of the LME says: "This proposed combination will 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."
HKEx says it is supportive of the development of the LME's own clearing house, LME Clear, which will enable the metals mart to launch new products and services more efficiently, drawing on HKEx's track record and experience in operating three clearing houses.
The Hong Kong Exchange says it will also preserve the LME's unique business model, including the operation of the open outcry trading 'Ring', while at the same time lending its IT expertise, infrastructure and resources to improve the LME's tech platform.