Singapore Exchange to Buy Baltic Exchange for GBP87 Million
August 22 2016 - 9:47AM
Dow Jones News
By Ian Walker and Costas Paris
The Singapore Exchange Ltd. and Baltic Exchange Ltd. Monday
confirmed that they have agreed the terms of a deal for the
Singapore Exchange to buy the Baltic Exchange for 87 million pounds
($114 million) in cash.
Under the deal, accepting Baltic Exchange shareholders will get
GBP160.41 in cash for each share, which includes a special dividend
payable by the Baltic Exchange. The special dividend is subject to
approval by Baltic Exchange shareholders and is conditional on
successful completion of the proposed acquisition, the companies
said in a joint statement.
The Wall Street Journal reported earlier this month that the
Singapore Exchange will make a formal offer for the Baltic Exchange
by the middle of this month, citing two people involved in the
matter.
SGX and Baltic began exclusive talks on May 25.
Singapore Exchange Chief Executive Loh Boon Chye said: "We look
forward to working together with the Baltic Exchange to develop new
products, benchmarks and services to the benefit of Baltic Members,
SGX shareholders and the shipping community worldwide."
Baltic Exchange Chairman Guy Campbell said: "The proposed
acquisition will accelerate the growth and development of the
Baltic Exchange beyond what it could achieve on its own...SGX has
committed to retaining the Baltic's ethos as a membership
organization, retaining our London headquarters and further
consolidating the Baltic's value, influence and reach within the
global shipping community."
"Following extensive consultations with stakeholders, over the
past few months, the board believes that SGX's offer is in the best
interests of Baltic Exchange shareholders, members, panelists,
employees and of the broader London maritime hub, from where it
will continue to be based," Mr. Campbell added.
The transaction, if completed, 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 acclaimed as
a driving force in Britain's rise as a global trading power,
matching merchants with ship-owners 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 created 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, a global
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 in 2011
for Australian bourse operator ASX Ltd.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749 and
Costas Paris at costas.paris@wsj.com
(END) Dow Jones Newswires
August 22, 2016 09:32 ET (13:32 GMT)
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