London Metal Exchange (LME) shareholders approved the $2.2 billion takeover offer from Hong Kong Exchanges & Clearing Ltd (HKEx), ending a 10-month contest.

The vote on Wednesday in London was 99.24 percent in favor, said Chris Evans, a spokesman for the LME. The board backed the June 15 proposal after evaluating all offers, including those from rivals CME Group Inc, Intercontinental Exchange Inc and NYSE Euronext. The proposal needed the backing of more than 50 percent of shareholders and owners controlling at least 75 percent of the stock in the 135-year-old exchange.

Hong Kong Exchanges is buying a bourse handling more than 80 percent of the world's trade in industrial-metal futures, setting global prices for metals from copper to aluminum to nickel. The LME, home to the city's last open-outcry trading, handled a record $15.4 trillion of contracts last year.

It is the first overseas acquisition for HKEx, the world's second-biggest exchange by market value, and its first contracts in commodities. LME members may get more access to China, which consumes more metal than any other nation.

The LME board recommended the offer because of the price, opportunities for growth and pledges to maintain the LME's existing structure, Chairman Brian Bender said in an interview July 18. The bourse will continue to be regulated by the Financial Services Authority. Final approval is expected in November, Abbott said.

"Hong Kong was paying more money and was offering the potential entry into China," said Nic Brown, the London-based head of commodity research at Natixis SA, which also owns a stake in the LME. "The two of those things together were presumably what outweighed alternative benefits that the ICE bid could have brought."

HKEx agreed to maintain the LME's contract structure and open outcry trading, conducted at the bourse on Leadenhall Street in London's financial district. It also will keep the existing warehousing network, help the LME develop its own clearinghouse and freeze trading fees until at least the start of 2015.

"The LME is a great platform for commodities trading and I think there are lot of synergies HKEx can bring forward," said Dominic Chan, an analyst at BNP Paribas SA in Hong Kong who says, "This is a win-win situation in the longer term."

A takeover by Hong Kong Exchanges may help the LME win more clients in the mainland , register warehouses in the country and clear products denominated in yuan, Bender said in a letter to shareholders July 9.

(HK Edition 07/26/2012 page2)