The Hong Kong stock exchange said on Friday it had entered into an agreement to buy the London Metal Exchange (LME) for a total of £1.39 billion ($2.15 billion). Hong Kong Exchanges and Clearing (HKEx) said its bid for the 135-year-old LME Holdings would allow it to “develop its own commodity offering and to diversify its revenue sources”. “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,” HKEx chief executive Charles Li said in a statement. “This is consistent with our strategy to expand beyond equities and equity derivatives and offers significant opportunities for revenue growth. “HKEx brings a unique ability to help the LME grow its business in Asia and, particularly, China and we will capitalise on this to deliver value for all our stakeholders.” The company said its purchase of the LME would boost its role as the bridge between China and international markets, and fulfilled a “key strategic priority” for HKEx to expand into commodities. “HKEx has identified a particular demand for commodities trading, focused around metals, to support the large and growing metals consumption in Asia and, particularly, China,” it said. LME chief executive Martin Abbott added the deal would “secure the future of the LME for its next 135 years”. “The LME’s global benchmarks plus HKEx’s pre-eminent market position in Asia, its IT and trading resources and clearing expertise will cement the LME’s position as the world’s foremost base metals trading venue,” he said. Li told reporters that LME members would be asked to pay higher fees in order to make the metals market profitable, adding that earnings growth would be “incremental”. The LME said the board intends to “unanimously recommend” that shareholders approve the transaction at a meeting that would be convened before the end of July. The offer for Europe’s last open outcry exchange will be financed with cash and Â£1.1 billion in bank loans, HKEx said. It values the LME at £107.60 a share. The LME is the world’s largest exchange trading nonferrous metals, including copper and aluminum, while HKEx is the world’s biggest exchange operator by market value. The offer must be approved by Britain’s Financial Services Authority (FSA). The LME said that while it was a global exchange “it has yet to realise fully the growth opportunity in Asia and China, in particular”. It said the deal with HKEx “provides a platform for significant revenue growth as the LME’s business and operations are expanded in Asia using HKEx’s regional resources, infrastructure and network”. The deal recognised the value of the LME brand, which would be preserved, and the company would continue to function as a Recognised Investment Exchange in London regulated by the FSA. Its “unique business model” including the “ring” for open outcry trading would also be preserved, the LME said. The LME put itself on the market in September last year. HKEx’s main rival in its bid to control the exchange was IntercontinentalExchange Inc. (ICE), according to earlier reports by Dow Jones Newswires. Other expressions of interest came from Chicago-based CME Group, which owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, and transatlantic exchange operator NYSE Euronext.