SGX and Baltic Exchange agree terms

Singapore Exchange (SGX:S68) and The Baltic Exchange Limited (Baltic Exchange) are pleased to announce that they have agreed on the terms for a recommended offer by SGX for the entire issued share capital of the Baltic Exchange (Proposed Acquisition). Yesterday’s announcement follows a period of extensive consultation with Baltic Exchange shareholders and other stakeholders.

Under the terms of the Proposed Acquisition, Baltic Exchange shareholders will be entitled to receive:

  • £160.41 in cash (the Cash Price) for each Baltic Exchange Share
  • £19.30 in cash (the Special Dividend) per Baltic Exchange Share as a final dividend

In aggregate, the Cash Price and the Special Dividend value Baltic Exchange’s entire issued ordinary share capital at approximately £87.0 million (approximately S$153 million).

Declaration and payment of the Special Dividend is subject to approval by Baltic Exchange Shareholders and is conditional on successful completion of the Proposed Acquisition.
It is intended that the Proposed Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006.

SGX has received irrevocable undertakings to vote in favour of the Proposed Acquisition from the Baltic Exchange Directors and certain Baltic Exchange Shareholders representing approximately 74 per cent of the existing issued share capital of Baltic Exchange.

Completion of the Proposed Acquisition is expected to occur towards the end of November 2016, subject to achieving the necessary shareholder, regulatory and Court approvals before that time.

Post-Acquisition Commitments

Under the terms of the Proposed Acquisition, SGX and SGX Baltic Investments Pte. Ltd (SBI) have committed to:

  • Maintain Baltic’s headquarters in St Mary Axe;
  • Maintain existing multiple clearing house model;
  • Strengthen the existing market benchmark production and governance model in-line with the proposed amended Guide to Market Benchmarks;
  • Maintain membership subscription fees, end user Baltic data fees and SGX clearing fees of FFA contracts at current levels for at least five years;
  • Continue to provide a range of membership services including dispute resolution and social and charitable activities; and
  • Procure that Baltic and BEISL will use their reasonable endeavours to revise the terms of data licensing and subscription, specifically to clarify that the usage of the Baltic indices and/or data for physical and financial settlement without the involvement of a Baltic Panellist is unacceptable unless explicitly permitted by licence (e.g. for clearing houses).

Implementation Agreement

SGX, SBI and Baltic have entered into an implementation agreement in relation to the implementation of the Proposed Acquisition and related matters (the Implementation Agreement). The Implementation Agreement contains certain assurances and confirmations between the parties, including provisions to implement the Scheme on a timely basis, to co-operate with each other to ensure the satisfaction of the conditions and undertakings regarding the conduct of the business of Baltic. The Implementation Agreement also contains the post-acquisition commitments given by SGX and SBI that are listed above.

The full Implementation Agreement announcement can be found here.

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