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272-Year Old Shipping Exchange Gets Acquisition Offer from Singapore

Patrick T. Fallon/Bloomberg News

Singapore Exchange is seeking to buy Baltic Exchange, the 272-year-old London-based provider of information on global shipping costs.

SGX has made a nonbinding bid for the Baltic, Southeast Asia’s biggest bourse operator said in a statement Feb. 26 after Reuters reported that talks were taking place. Discussions are preliminary, SGX said.

The Baltic Exchange confirmed in an e-mail that it has received multiple approaches and is in talks with several firms. Reuters earlier said the Baltic Exchange had held talks with London Metal Exchange, CME Group Inc., Intercontinental Exchange Inc. and Platts. The agency’s report cited unidentified people familiar with the matter.

News of the offer comes days after London Stock Exchange Group and Deutsche Boerse AG said they were in merger talks, potentially igniting a new round of merger-and-acquisition activity between exchanges. For SGX, contracts using the Baltic’s freight-rate data are an appealing target.

“This acquisition will help SGX strengthen their derivatives business,” Bernard Aw, a strategist at IG Asia in Singapore, said by phone. “Their derivatives business has been doing quite well. If equity trading continues to stagnate, derivatives will become increasingly dominant.”

Derivatives accounted for about 40% of SGX’s most recent quarterly revenue as demand grows for contracts tied to equities and commodities, including iron ore. The exchange also offers freight contracts tied to shipping costs compiled by the Baltic Exchange.

The Baltic, which publishes benchmark freight rates, is one of the City of London’s most famous trading names. Like insurance market Lloyd’s of London, it grew out of 18th-century coffeehouses, where ship owners and merchants matched vessels with cargoes such as grain. Its name is derived from the trade in tallow, used to make candles and soap, and other goods that originated from the Baltic states.

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By Jonathan Burgos and Eduard Gismatullin
Bloomberg News

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