Singapore Exchange Limited (SGX) has announced it has entered into an agreement with The Baltic Exchange Limited (Baltic Exchange) through which SGX will enter into exclusive discussions with the Baltic Exchange regarding a cash offer for 100% of the share capital of the Baltic Exchange (Transaction).
This follows SGX’s announcement on 26th February 2016 that it had submitted a non-binding bid for the acquisition of the Baltic Exchange. The period of exclusivity will commence on 25th May 2016 and expire on 30th June 2016.
The Baltic Exchange and SGX will together meet with shareholders of the Baltic Exchange and the wider stakeholder community over a number of weeks to explain and discuss the offer. SGX emphasises that there is no assurance that the entry into the exclusivity agreement will lead to any definitive agreement(s) or completion of the Transaction. SGX will comply with the listing rules of the Singapore Exchange Securities Trading Limited, and will promptly disclose any material developments with regard to the Transaction by way of public announcement.
The proposed Transaction would bring together complementary strengths of Singapore and London, two of the world’s most important maritime hubs. SGX has been successful in driving the growth of the global dry bulks and freight market and is now a significant provider of clearing and settlement of freight derivatives. Both SGX and the Baltic Exchange would also benefit from new growth opportunities, including potential new shipping benchmarks and clearing solutions that meet the market’s evolving needs for data and trading.
SGX’s proposal includes a commitment to maintaining continuity in aspects of significance and relevance to both the Baltic Exchange and SGX. This involves keeping the Baltic Exchange’s headquarters in St Mary Axe, City of London, maintaining the existing market benchmark production and governance model, and keeping end-user Baltic data fees and fees for SGX clearing of freight derivatives at current levels for at least five years. Included in the proposal is also a commitment to the multiple clearing house model. Additionally, SGX will seek to enhance the relationship between the Baltic Exchange and its contributing panellists and will provide a commitment regarding the future business of freight derivative brokers.
SGX CEO Loh Boon Chye said: “We are delighted to have been granted exclusivity to discuss this potential transaction and look forward to working with Baltic Exchange’s shareholders, members and relevant stakeholders to further discuss our proposals. This is the tenth year of our relationship with the Baltic Exchange and we recognise the integral role the Exchange plays within the global shipping community, which we hope to develop for the benefit of the industry as a whole.”
Chairman of the Baltic Exchange Guy Campbell said: “SGX has indicated that in the event its bid is successful, it would maintain the current model for the Baltic business and our presence and building in London, as the platform for the Baltic’s future growth. The proposed transaction would further strengthen the links between London and Singapore, two of the world’s leading maritime business hubs, to the benefit of all.
“The Board considers this proposal is an exciting development for the Baltic and all the stakeholders in the markets it serves, which secures the future of the Baltic’s role in the global maritime marketplace in the 21st century.
“We look forward to communicating directly with many of our stakeholders in the next few weeks to explain the proposal to them.”