London (Platts)--29Nov2012/624 am EST/1124 GMT

The UK Financial Services Authority has approved the acquisition of the London Metal Exchange by Hong Kong Exchanges & Clearing Ltd, paving the way for the deal to close next month, the LME said Friday.

"The Financial Services Authority has given notice in writing under section 301G(3) of the Financial Services and Markets Act 2000 of its approval in respect of HKEx acquiring control over LME Limited through its indirect subsidiary, HKEx Investment," the LME said in a statement.

Assuming court approval of the transaction at a December 5 hearing, the deal is expected to become effective on or around December 6, the exchange added.

In June, the LME said its board had entered into a framework agreement with the HKEx regarding the terms of a recommended cash offer of GBP1.388 billion ($2.16 billion at the then-prevailing exchange rate). In July the deal was approved by an overwhelming majority of LME shareholders.

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The LME said in September 2011 that following the receipt of a number of proposals it would initiate a process of reviewing the strategic alternatives open to it, including the possibility of a sale of the exchange.

Fifteen parties registered preliminary interest in a transaction with the LME, a number that was gradually whittled down to two, who entered into a phase of confirmatory due diligence before submitting final bids in early June. Of the two final bidders, HKEx was the unanimous choice of the LME board, the exchange said.

The LME estimates its global market share of nonferrous base metal futures and options contract trade at around 80%. In 2011, a record 146.6 million lots traded on the exchange, equivalent to $15.4 trillion in notional contract value.

HKEx, the world's second-largest exchange group by market capitalization, operates two exchanges and three clearing houses covering both cash and derivatives markets.

--Andy Blamey, andy_blamey@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com

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