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HKEx gets UK regulatory nod for US$2.2b LME takeover
Source: Bloomberg News |
November 30, 2012, Friday
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Print Edition
Print Edition
THE London Metal Exchange's US$2.2 billion takeover by Hong Kong Exchanges & Clearing Ltd has won approval by the Financial Services Authority, the UK's regulator.
The acquisition still needs approval of the High Court of England and Wales, with a hearing set on Wednesday, HKEx said in a statement on its website yesterday. The transaction will take effect on or about Thursday, the LME said in a separate statement.
The LME backed HKEx's offer on June 15 over bids from rivals CME Group Inc, Intercontinental Exchange Inc and NYSE Euronext. Shareholders of the LME approved the takeover a month later. The LME handles more than 80 percent of metals trading, and HKEx may be able to help the exchange gain access in China, the biggest metals buyer.
"This is what we've been waiting on," Thomas Monaco, an analyst at Mizuho Securities Asia Ltd in Hong Kong, said in a telephone interview. "It's a little later than we would have thought, probably about a month or so."
HKEx plans to sell about US$800 million of shares at HK$116.10 to HK$119 (US$14.98 to US$15.36) each, according to a term sheet obtained by Bloomberg News. The share sale will help fund the LME takeover. They closed at HK$124.80 today. The exchange also sold US$500 million in convertible bonds in September for the deal. They have an initial conversion price of HK$160 a share.
The offer was priced at 181 times LME's 2011 net income, making it the most expensive bourse merger over US$1 billion. The deal doesn't need approval from HKEx's shareholders. It is the first overseas acquisition for the Asian bourse, the world's second-biggest exchange by market value, and its first contract in commodities.
Shareholders of the Tokyo and Osaka stock exchanges approved on November 20 the merger of Japan's two largest bourses. Japan wants to create a national exchange handling equities, commodities and other securities to help balance the rise of the Chinese markets.
Singapore Exchange Ltd's US$8.3 billion bid for Sydney-based ASX Ltd was blocked in April 2011 by Australia's government on national interest grounds.
Shares of HKEx have shed 14 percent since its offer for the LME was reported in February. The Bloomberg World Exchanges Index of global bourse operators has fallen 9 percent in the same period. The stock hit this year's low of HK$100 on July 26 after LME shareholders approved the merger.
Metals prices more than tripled in the past decade as demand from emerging markets overwhelmed supplies from mines. The LME handled a record US$15.4 trillion of contracts last year. The 135-years old exchange sets global prices for metals from copper to aluminum to nickel.
HKEx, which lost its place as the world's biggest exchange operator by market value to CME Group, is seeking to broaden its business as large initial public offerings from the Chinese mainland slows and equity volumes fall.
The acquisition still needs approval of the High Court of England and Wales, with a hearing set on Wednesday, HKEx said in a statement on its website yesterday. The transaction will take effect on or about Thursday, the LME said in a separate statement.
The LME backed HKEx's offer on June 15 over bids from rivals CME Group Inc, Intercontinental Exchange Inc and NYSE Euronext. Shareholders of the LME approved the takeover a month later. The LME handles more than 80 percent of metals trading, and HKEx may be able to help the exchange gain access in China, the biggest metals buyer.
"This is what we've been waiting on," Thomas Monaco, an analyst at Mizuho Securities Asia Ltd in Hong Kong, said in a telephone interview. "It's a little later than we would have thought, probably about a month or so."
HKEx plans to sell about US$800 million of shares at HK$116.10 to HK$119 (US$14.98 to US$15.36) each, according to a term sheet obtained by Bloomberg News. The share sale will help fund the LME takeover. They closed at HK$124.80 today. The exchange also sold US$500 million in convertible bonds in September for the deal. They have an initial conversion price of HK$160 a share.
The offer was priced at 181 times LME's 2011 net income, making it the most expensive bourse merger over US$1 billion. The deal doesn't need approval from HKEx's shareholders. It is the first overseas acquisition for the Asian bourse, the world's second-biggest exchange by market value, and its first contract in commodities.
Shareholders of the Tokyo and Osaka stock exchanges approved on November 20 the merger of Japan's two largest bourses. Japan wants to create a national exchange handling equities, commodities and other securities to help balance the rise of the Chinese markets.
Singapore Exchange Ltd's US$8.3 billion bid for Sydney-based ASX Ltd was blocked in April 2011 by Australia's government on national interest grounds.
Shares of HKEx have shed 14 percent since its offer for the LME was reported in February. The Bloomberg World Exchanges Index of global bourse operators has fallen 9 percent in the same period. The stock hit this year's low of HK$100 on July 26 after LME shareholders approved the merger.
Metals prices more than tripled in the past decade as demand from emerging markets overwhelmed supplies from mines. The LME handled a record US$15.4 trillion of contracts last year. The 135-years old exchange sets global prices for metals from copper to aluminum to nickel.
HKEx, which lost its place as the world's biggest exchange operator by market value to CME Group, is seeking to broaden its business as large initial public offerings from the Chinese mainland slows and equity volumes fall.
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