LSE set to join the auction for £1bn LME

THE London Stock Exchange (LSE) is set to join the bidding process for the £1bn-rated London Metal Exchange.

Xavier Rolet, chief executive of the LSE, is said to be ready to battle America’s IntercontinentalExchange, one of the parties to first express an interest in buying the LME last year.

Rolet wants to diversify the LSE as it tries to move on from last year’s failed bid for Canada’s TMX Group. The LSE, which last week beat quarterly revenue forecasts with a 17 per cent rise, is in talks to buy clearing house LCH.Clearnet and expects to close a £1bn deal next month.

The 135-year-old LME, which has one of the world’s last open-outcry trading pits, opened the field to suitors last year after receiving an initial approach from an unnamed party.

It is being advised by investment bank Moelis and weighing up around 15 bidders. They are also thought to include commodities giant the CME Group, broker ICAP and Deutsche Boerse-owned Eurex. Initial bids are expected by the end of February.

Any deal would be likely to need the backing of major shareholders, which include J.P. Morgan, Goldman Sachs and Barclays Capital. Yesterday the LSE and LME declined to comment.

Some members of the LME are concerned, however, that a new owner could raise fees when their margins are being squeezed. Last week the index was forced to announce plans for a meeting to discuss its controversial decision to raise trading fees.

It comes just days after Duncan Niederauer, chief executive of NYSE Euronext, said there is only a “10 to 20 per cent” chance his index’s $9bn (£5.72bn) merger with Deutsche Boerse will go through.