Hong Kong stock exchange makes $2.2 billion offer to London Metal Exchange

Hong Kong's stock exchange decided to buy the 135-year-old London Metal Exchange for 1.4 billion pounds ($2.2 billion). Hong Kong Exchanges and Clearing Ltd. signed an agreement with the LME, the world's largest metals market, to pay 107.60 pounds for each of its 12.9 million shares.

To move away from the slow growing equities business, Hong Kong bourse's offer follows the plans announced earlier this year to expand into commodities, Earlier in 2012, Hong Kong Exchanges' CEO Charles Li said the exchange wanted to move quickly to come up with new products that would capture China's strong demand for commodities before international and mainland Chinese players develop their own.

The LME hosts trading of futures and options contracts for copper, aluminum, zinc nickel,  and other metals annually. Here deals are made by traders huddling together on a trading floor and calling out prices, rather than electronically, which is also known as the last open-outcry exchange in Europe.

It should be noted, that the takeover also needs approval from Hong Kong Exchange's shareholders and British regulators.