* LME shares drew 'great deal of interest'
* Sale to J.P. Morgan in final stages
* Process to sale other parts of MF Global 'continues apace'
By Susan Thomas
LONDON, Nov 23 J.P. Morgan has
agreed to buy all of defunct U.S. brokerage MF Global's
shareholding in the London Metal Exchange after a
competitive bidding process, KPMG, the administrators for MF
Global's UK unit, said on Wednesday.
KPMG did not give a price for the sale.
J.P. Morgan already has a 6.2 percent stake in the LME, the
world's largest metals market place, which has opened its doors
to potential suitors. Increasing its stake alters the landscape,
as LME shareholders seek to protect their interests, or make a
profit, in any eventual takeover.
"We received a great deal of interest in the LME shares and
are pleased to be in the final stages of concluding a sale,"
said Richard Heis, joint special administrator of MF Global UK.
Sources told Reuters on Tuesday that J.P. Morgan would pay
25 million pounds ($39 million) for the 4.7 percent stake in the
LME, implying a total value of around 530 million pounds.
"It's a good price that they've paid," a source at a
shareholder company said. "The question is are they looking at
trying to make a quick profit or is it a much longer-term
The LME had been due to open its books to potential bidders
by Dec. 8, a spokesperson for the exchange said earlier. But a
source close to the LME later said this now seemed ambitious,
and that the date could be pushed back.
Goldman Sachs is also a large shareholder in the LME.
Contenders for the 134-year old group are the Chicago Mercantile
Exchange CME.O and the IntercontinentalExchange ICE.N energy
market, both U.S. groups.
KPMG said J.P. Morgan will also buy the B-shares held by MF
Global. Those would be bought for 2 million pounds, one of the
sources said on Tuesday.
B-shares give holders the right to trade on the LME and can
be sold separately to other members of the exchange. J.P. Morgan
already holds B-shares, and it was unclear what would happen to
the new shares it would now acquire.
The LME stake sale, though, could leave more money for MF
KPMG's Heis said the process to sell other parts of MF
Global's UK business "continues apace and we are in negotiations
with several parties to this end".
A spokesman for KPMG said there were no further details.
Industry sources told Reuters last week that MF Global's
ring dealing seat on the LME will be bought by U.S.-based broker
INTL FCStone, although no price was given.
An industry source said on Wednesday MF Global's shares and
the ring dealing seat had been treated as separate assets. J.P.
Morgan already has a ring dealing seat on the LME.
Heis also said KPMG had prepared a timeline for the return
of client assets and funds.
MF Global filed for Chapter 11 protection on Oct. 31 after
the New York-based company revealed it had made a $6.3 billion
bet on European sovereign debt.
The revelation worried investors, credit rating agencies and
trading partners, and resulted in a liquidity crunch.