After what seemed like the gestation period of a baby elephant, the London Metal Exchange finally said yes to an offer of 1.388 billion pounds for its entire shareholding from the Hong Kong Exchanges and Clearing Ltd (HKEx). This now goes to a vote in July for shareholder approval, and for many of those shareholders, who took up shares a decade ago notionally valued at 10 pence, selling at a whopping 107.60 pounds a share means Christmas has come early.
Or several of them – the LME’s third largest shareholder Metdist Group has 1.21 million shares, which will raise some 130 million pounds. In the year to March 2010, Metdist’s gross profits were around 11 million pounds, so there is a nice little earner on the table here.
The LME, where the prices of copper, aluminium and other leading metals are discovered daily, was set up 135 years ago and started life above a City of London hatshop at a time when
Britain’s longest-reigning monarch, Victoria, ruled over the 19th century’s leading power. Pictures of the LME’s founding fathers certainly show an abundant and impressive range of headgear.
Now the LME is looking at a future away from the narrow Victorian streets in London, where it was born, to a centre of gravity in Asia, notably China, which is set to become the 21st century’s global powerhouse. Hats will be few and far between – rather it will be gleaming hi-rise skyscrapers on the Hong Kong waterfront.
Is the LME, which is the world’s largest non-ferrous exchange, actually worth that amount of money? After all, its 2011 profits were just 7.7 million pounds. Nothing much is likely to change for now and the chaps in the ring will still be shouting and yelling until at least 2015. After that only time will tell. But the likelihood is that when the LME clocks up its 150th birthday screens will have replaced the suits where deals are concerned.
