The offer must now be approved by the LME board. If accepted it will give Asia's largest bourse a much needed entry into a the booming commodity trading business, and brings LME members closer to China, the world's biggest metals buyer.
It includes an agreement to "preserve the LME’s unique business model", including the continuation of open outcry trading at the 135-year-old exchange.
Charles Li, chief executive of HKEx said: “The acquisition of LME Holdings represents a unique opportunity for us to acquire in one stroke a position of global leadership in the commodities market. This is consistent with our strategy to expand beyond equities and equity derivatives and offers significant opportunities for revenue growth."
Some analysts have expressed concern the HKEx may be over-paying for the LME. Those concerns have partly weighed down on the company's shares, with the stock down 9.4 per cent this year, compared to a 4.3 per cent rise in the benchmark Hang Seng index.