LONDON â€" Shareholders of the London Metal Exchange agreed on Wednesday to a £1.38 billion ($2.1 billion) takeover deal from Hong Kong Exchanges and Clearing.
The deal will allow the Asian company to control the world's largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.
Hong Kong Exchanges, part owned by the local Hong Kong government, had announced its all-cash offer last month, outbidding several American rivals for control of the 135-year-old London exchange.
An overwhelming majority of London Metal Exchange's shareholders approved the deal on Wednesday. The takeover required the backing of at least 50 percent of its shareholders; those shareholders must also represent more than 75 percent of the firm's stock.
“I am delighted that our shareholders have overwhelmingly supported the board's recommendation,†Martin Abbott, the London Metal Exchange's chief executive, said in a statement.
The acquisition will provide a windfall for JPMorgan Chase and Goldman Sachs, which own a combined 20.4 percent of the metal exchange. The two banks are likely to earn more than a combined $430 million from the transaction.
Despite concerns that the Chinese economy may be slowing down, China and other emerging economies in the region are now the largest buyers of a number of commodities, including iron ore and coal.
The acquisition, whose price tag was higher than analysts' estimates, will help the Hong Kong exchange take advantage of this demand.
“All the world's leading exchanges have been fighting in this area,†Charles Li, chief executive of Hong Kong Exchanges, said in an interview last month. “This is about growth and conquering new markets.â€
Total trading on the London Metal Exchange increased 22 percent last year from 2010, while the value of all traded contracts rose 33 percent, to $15.4 trillion.
In an interview last month, Romnesh Lamba, head of market development for Hong Kong Exchanges, said that after securing approval for the takeover, the strategy will center on increasing the number of Chinese participants on the London exchange.
Currently, less than a quarter of the London Metal Exchange's customers hail from China, and Mr. Lamba said there were plans to create contracts denominated in renminbi, the Chinese currency, and to allow for clearing of trades in Asia to help increase the number of regional users. The changes would take place over the next three years, he added.
Hong Kong Exchanges also wants to gain Chinese government approval to use local warehouses to provide commodities for domestic customers. Chinese regulations currently do not allow foreign exchanges to operate mainland warehouses.
By securing control of the L.M.E., Hong Kong Exchanges has ended a battle that spanned more than nine months and pitted many of the world's largest financial exchanges against each other.
NYSE Euronext and the CME Group made initial bids, but dropped out earlier this year, according to a person with direct knowledge of the matter.
InterContinental Exchange, based in Atlanta, also had proposed buying the London Metal Exchange, but was eventually outbid by Hong Kong Exchanges.
The takeover is expected to close by the end of the year.
