Don't raise bid for metal exchange, lawmaker says
Hong Kong Exchanges and Clearing should not increase its offer for the London Metal Exchange because that might be contrary to the interests of its investors, legislator Chim Pui-chung warned yesterday.
'HKEx's original bid was very high and should not rise further. Any overpriced deal would hurt shareholders,' the lawmaker told the South China Morning Post.
The warning from Chim, who represents the financial services sector in Hong Kong's Legislative Council, came after the LME, which handled 80 per cent of the global trade in industrial metals futures, was reported to have asked HKEx and Intercontinental Exchange (ICE) to submit new bids on Thursday, indicating that it wanted higher offers.
Representatives of HKEx and ICE, which are both already bidding more than GBP1 billion (HK$11.93 billion), met LME's board on Thursday.
Both bidders vowed to keep LME's base in London and retain its open-outcry trading method.
An HKEx spokesman yesterday declined to comment on whether the bourse would raise its offer.
Analysts have already said both exchanges' bids for the LME look high.
Last month, bids from NYSE Euronext and CME were rejected as too low.
'HKEx's share price has kept falling in recent months, which shows investors have reservations about the acquisition,' Chim said. 'This is the first time that [the exchange] has attempted an international takeover, and it has no experience in this field. HKEx management need to be extremely careful.'
HKEx yesterday closed at HK$101.50, down 4.8 per cent from its previous close, and 31 per cent off its peak in February when news of its LME bid emerged. Brokers attributed the share price drop on choppy markets.