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Singapore, Baltic Exchanges Extend Talks

Baltic Exchange
Stained glass window at the Baltic Exchange

By Reuters 2016-06-28 17:23:09

Singapore Exchange Ltd (SGX) and London's Baltic Exchange have extended by two months exclusive talks which may lead to a sale of the British company at the heart of global shipping, the two firms said on Tuesday.

Founded in 1744, the privately-owned Baltic Exchange is no longer a forum for chartering vessels but owns benchmark indexes for global shipping rates and provides a trading platform for the multi-billion dollar freight derivatives market.

On May 25, the two sides said SGX was in exclusive talks to buy the Baltic, which were due to expire on June 30. They said on Tuesday the exclusivity period had been extended to Aug. 31.

"Over the past weeks the Baltic Exchange and SGX have together met with Baltic Exchange shareholders, members and panellists as well as the wider stakeholder community to discuss the potential transaction and have made good progress in consultations," the Baltic said.

"The extension to the period of exclusivity allows this dialogue to continue."

SGX reiterated on Tuesday there was no assurance of a deal.

Sources have previously valued the sale at $100 million.

A Baltic spokesman said Britain's vote to leave the European Union had no bearing on the extension of the talks.

The Baltic's daily benchmark rates and indices are used to trade and settle freight contracts as well as data used in the freight derivatives or FFA market, which allow investors to take positions on freight rates in the future. The data is collected each day from market players known as panellists.

Competitive Ship Brokers Limited (CSBL), a recently-founded association of smaller players in sector, said it objected to signing exclusivity for the data they contributed as panellists, which is seen as a key requirement for a deal.

CSBL chairman Gary Weston said the extension by the Baltic was "buying them some time to see if they can improve the terms to the panellists".

"If we don't sign it, the Baltic will need to make a decision can they go without us," he added.

The Baltic spokesman declined to comment when asked if extending talks was also due to resolving issues with the panellists.

In February, the Baltic confirmed it had received a number of "exploratory approaches" after SGX said it was seeking to buy it.

The London Metal Exchange, CME Group, ICE , state-run conglomerate China Merchants Group and Platts were among other potential bidders, sources have said previously.