Singapore Exchange To Make Formal Offer For Baltic Exchange
03 August 2016 - 10:35PM
Dow Jones News
By Costas Paris
NEW YORK -- Singapore Exchange Ltd. will make a formal offer for
the Baltic Exchange by the middle of this month in a move that
could see another historic London marketplace end up in foreign
hands, two people involved in the matter said Wednesday.
"The deal is mostly done and the SGX is putting together an
offer of around $100 million," one of those people said.
SGX was a late entrant in the race for the Baltic. Other suitors
included Platts, a division of S&P Global Inc., CME Group Inc.,
the operator of the Chicago Mercantile Exchange; and state-run
conglomerate China Merchants Group, the people said.
SGX and the Baltic entered exclusive talks on May 25.
If the deal is sealed, the transaction would represent the
second sale in recent years of a storied London exchange to an
Asian operator. In 2012, Hong Kong Exchanges & Clearing Ltd.
bought the London Metal Exchange.
The 272-year-old Baltic Exchange is credited with helping expand
British trade during the country's imperial heyday. Founded in
1744, it grew out of one of the many coffee shops concentrated in
the City of London, the capital's historic trading center, where
merchants congregated to conduct business.
It matured into a more formal market and was later credited as a
driving force in Britain's rise as a global trading power, matching
merchants with shipowners and serving as a venue for traders to
swap tips and information.
More recently, the exchange pioneered a derivatives market
linked to freight. The Baltic Freight Index was launched in 1985,
and was followed by a series of other freight-market indexes, used
to trade and settle shipping freight contracts. The Baltic Dry
Index, for instance, provides daily freight rates for dry-bulk
cargoes such as iron ore, coal, cement and grains. The index has
long served as a benchmark for the health of the shipping industry
and for global trade more broadly.
For many decades, the Baltic Exchange was housed in a grand
marble building in the heart of London's financial district. That
building was destroyed in a bombing by the Irish Republican Army in
1992.
As modern communications and electronic trading rendered
physical trading floors largely redundant, the Baltic Exchange for
years held on to a reputation in London's financial district as a
clubby redoubt for the pinstripe-wearing brokers of an earlier
era.
Shareholders include some of the biggest players in shipping,
such as owners, charterers and brokers. Clarksons Platou, the
world's leading provider of shipping services; Royal Bank of
Scotland Group PLC; Louis Dreyfus and some of the biggest Greek
shipping magnates all hold seats.
A deal would significantly boost SGX's derivatives business and
further advance Singapore's ambitions of becoming a global maritime
financial center. It is also the first big acquisition attempt by
Singapore Exchange since its unsuccessful, US$8 billion bid for
Australian bourse operator ASX Ltd. in 2011.
Write to Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
August 03, 2016 08:20 ET (12:20 GMT)
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