NYSE, CME Group, and ICE Battle for London Metal Exchange

NYSE Euronext (NYSE:NYX) and the CME Group (NASDAQ:CME) are adding to the exchange operator consolidation conversation. The target this time is the 135-year old London Metal Exchange — the last outpost of outcry pit-trading in Europe, and also one of the few surviving member-owned and operated exchanges in the world.

Pursuant to LME’s announcement in September that it had received preliminary expressions of interest from 10 bidders, it appears that major U.S. exchanges NYSE Euronext and the CME Grouphave valued LME up to 1 billion pounds in their bids. The Intercontinental Exchange (NYSE:ICE) is also in the fray.

NYSE’s partner in an aborted merger, Deutsche Börse, has not yet made a bid. NYSE’s bid rationale could be LME’s complementary fit with its agro businesses run out of NYSE Liffe, more so when the two use the same warehousing facilities, plus the possibility of clearing LME’s trades through its nascent clearing house, NYSE Liffe Clear, being set up in London.

The bids will be considered by the LME board on February 23. Apart from the financial ramifications, the board may also have to consider its members’ divided views about the sale — many are loath to surrender control of their exchange, while others are keen to book the profits that would be accrued by a sale concluded at a billion-pound valuation. The offer would need the support of 75 percent of LME’s members to go ahead, but shareholders JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), and Metdist hold 29.8 percent between themselves, and have the clout to block the sale.

Here’s how these shares are reacting to the news:

CME Group Inc. (NASDAQ:CME): CME shares recently traded at $291.77, down $3.88, or 1.31%. They have traded in a 52-week range of $224.69 to $316.68. Volume today was 349,030 shares versus a 3-month average volume of 701,984 shares. The company’s trailing P/E is 10.72, while trailing earnings are $27.15 per share.

IntercontinentalExchange, Inc. (NYSE:ICE): ICE shares recently traded at $133.93, up $0.1, or 0.07%. They have traded in a 52-week range of $102.57 to $135.38. Volume today was 275,687 shares versus a 3-month average volume of 717,194 shares. The company’s trailing P/E is 19.47, while trailing earnings are $6.90 per share.

JPMorgan Chase & Co. (NYSE:JPM): JPM shares recently traded at $38.40, up $0.4, or 1.05%. They have traded in a 52-week range of $27.85 to $48.13. Volume today was 13,275,350 shares versus a 3-month average volume of 36,407,800 shares. The company’s trailing P/E is 8.54, while trailing earnings are $4.48 per share.

The Goldman Sachs Group, Inc. (NYSE:GS): GS shares recently traded at $116.33, up $1.59, or 1.39%. They have traded in a 52-week range of $84.27 to $168.30. Volume today was 2,275,269 shares versus a 3-month average volume of 7,349,690 shares. The company’s trailing P/E is 25.73, while trailing earnings are $4.51 per share.

NYSE Euronext, Inc. (NYSE:NYX): NYX shares recently traded at $29.37, up $0.08, or 0.27%. They have traded in a 52-week range of $21.80 to $41.60. Volume today was 723,582 shares versus a 3-month average volume of 2,806,320 shares. The company’s trailing P/E is 12.43, while trailing earnings are $2.36 per share.

To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com