Reuters: Mergers News: UPDATE 1-Two LME suitors outline offers to board

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UPDATE 1-Two LME suitors outline offers to board May 31st 2012, 11:49 Thu May 31, 2012 7:49am EDT * ICE, HKEx presenting binding offers to LME board * AGM set for June 8, may be too soon for vote By Harpreet Bhal and Maytaal Angel LONDON, May 31 (Reuters) - Two suitors vying for the London Metal Exchange (LME) will make presentations of their bids to the bourse's board on Thursday, two sources with knowledge of the matter said, as the race to buy the 135-year-old institution nears its climax. InterContinental Exchange and Hong Kong Exchanges and Clearing are the remaining two from a shortlist of four to buy the world's biggest metals market place after the exit of CME Group and NYSE Euronext. "This is a regularly scheduled meeting, but it makes sense that they would want to hear from the bidders," one source said, adding it was unlikely that the board will make a decision on Thursday. The second source said the bidders could be asked to return with refined offers, which could mean increasing the value of their bids. Both ICE and HKEx bids are around the 1.2 billion pounds ($1.86 billion) mark. Both exchanges have guaranteed to keep the LME's operations unchanged, including its open outcry trading ring and unique prompt-date system, sources with knowledge of the matter have said. "It might come down to price," the second source said. The chief executives of both companies were in London, the second source said. The LME declined to comment on the board meeting. "I think the sale is inevitable," said a metals trading head at a company that has a shareholding in the LME. "I think certainly we'll know very soon the details of the proposals from the bidders. The board will be guided by the presentations that are made and the quality of the bids, and they will make a recommendation to the shareholders soon." The LME intends to present just one bid to shareholders, sources have told Reuters. There is an annual general meeting on June 8, but the sources said that would be too soon for shareholders to vote on a bid. A special meeting of shareholders, which include U.S. banks J.P. Morgan and Goldman Sachs, would be called for that. The LME is owned by the banks, brokerages and industrial companies that use it, with J.P Morgan and Goldman Sachs the top two stakeholders. Any potential buyer would have two hurdles to clear: it would have to win 75 percent of ordinary shares as well as 50 percent of shareholders. This means that due to the lopsided spread of shareholdings, the bid could fail if many small shareholders oppose the bid, even if it attracts more than 75 percent of total shares. Link this Share this Digg this Email Reprints

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