$1.6 Billion for London Metal Exchange? CEO Says Maybe
The London Metal Exchange, the world’s largest metal-trading platform, should be able to get an offer of at least a billion pounds ($1.6 billion), CEO Martin Abbott told CNBC.
“I’m not going to get into public speculation,” Abbott said on CNBC Asia’s “Squawk Box” on Friday. “That number has been put up in the press. We haven’t put it there. As a matter of personal pride, as the CEO, I ‘d like to think that we’d get there at least.”
The LME, which handles about 80 percent of global futures trading for commodities like aluminum, copper and zinc, has winnowed down the list of more than 10 interested parties in the first round, Abbott said. He declined to reveal how many remain in the second round, but said they have until May 7 to submit a new bid.
The 135-year-old exchange announced in September last year that it had received preliminary offers of interest from 10 potential suitors. Among the bidders were U.S. exchanges NYSE Euronextand CME Group , according to media reports. Asia’s largest bourse operator, Hong Kong Exchanges and Clearing , also said end-April that it was considering a bid.
Any offer would need 75 percent support from LME’s largest shareholders, who include JPMorgan Chase with a 10.9 percent stake, Goldman Sachs with 9.5 per cent, and Metdist, a family-owned metals trader, with 9.4 percent.
Abbott said that while it is possible that shareholders decide not to sell if “there’s not enough value being brought to them by a bid”, he does doesn’t expect regulatory obstacles because a LME sale would neither infringe nationalistic nor competitive boundaries.
The proposed mergers of the Toronto exchanges and the London Stock Exchange, and the Australian and Singapore stock exchanges fell apart because of “nationalistic reasons”, Abbott said. The potential tie-up between NYSE-Euronext and Deutsche Boerse was blocked earlier this year by European Union regulators who were concerned that the union would be a “mega merger,” he said.
“We have enough self knowledge to know that we are not the basis of a mega merger; we are a niche player,” Abbott said. “We don’t bring world domination in the exchange space so I don’t think we are going to get that kind of regulatory opposition.”