Singapore Exchange SGX enters exclusive discussions to acquire Baltic Exchange

Leading Asia financial marketplace Singapore Exchange Limited (SGX) has announced that it has entered into an agreement with The Baltic Exchange Limited (Baltic Exchange) through which SGX will enter into exclusive discussions with Baltic Exchange regarding a potential cash offer for 100% of the share capital of Baltic Exchange. This follows SGX’s earlier announcement on February 26 that it had submitted a non-binding bid for the acquisition of the Baltic Exchange. The period of exclusivity will commence on May 25 and extend to June 30.

Note that there is no assurance that the exclusivity agreement will lead to any definitive agreement or completion of an actual transaction.

Baltic Exchange and SGX will together meet with shareholders of Baltic Exchange and the wider stakeholder community over a number of weeks to explain and discuss the offer. 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 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 Baltic Exchange and SGX. This involves keeping 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 Baltic Exchange and its contributing panelists 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.

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