Exchange may be valued at $1.6 million: CEO
The London Metal Exchange (LME) today said on its website that the Chairman has issued an update to shareholders regarding the potential acquisition of the exchange.
The world's premiere non-ferrous metal exchange, last week was estimated to be valued at $1.6 billion. However, the exchange's Chief Executive Officer, Martin Abbott had not said anything on the matter. Abbott today said that the company might be valued at $1.6 billion, in a CNBC report.
Greenwich, Connecticut based Euqity Research Desk said that the bourse may be valued at $1.3 billion.
The company did not reveal how many bids it had received, neither did it reveal how much was offered, on grounds of confidentiality, but sources close to the development say that CME Group, Hong Kong Exchange and Clearances Limited, IntercontinentalExchange Inc, NYSE Liffe, the
London-based derivatives arm of NYSE Euronext were in the race. (Also read: Why a HKEx/LME deal would be a win-win situation)
However, this does not guarantee a takeover. The LME's goal is to have one bid to present to shareholders for a vote, which will require 75% of shares and 50% of shareholders to be successfull. The LME board is slated to next meet on May 31, although there is a possibility that it could be held earlier.
J P Morgan holds 10.9% of LME, while Goldman Sachs has 9.5% and Metdist, a family based trading firm owns 9.4% of the exchange.
JP Morgan increased its stake by 4.7% to 10.9% by buying off bankrupt MF Global's stake in the company in November last year, thus exceeding Goldman Sachs holding. This significantly boosted the former's say in the LME takeover battle.
People familiar with the matter said the bidders are unlikely to influence sweeping changes to the way the LME currently operates. But the LME hasn't sought assurances to ensure a potential buyer keeps its operating model intact, the exchange has said.
LME had received preliminary offers of interest from potential bidders in September last year.
The US economy grew at a slower than expected pace at 1.9% in the first three months of 2012, primarily hit by lower private sector investments.