Singapore Exchange has finally released more details of its bid for The Baltic Exchange, where it is making an offer of GBP160.41 (S$187.43 per share based on current exchange rate) cash per share or a total consideration of GBP77.6m (or S$136.68m). As a recap, SGX signed the exclusivity agreement on 25 May 2016. In an earlier announcement, the proposed partnership aims to explore new shipping benchmarks and clearing solutions.

In addition, it was shared that it intends to keep the Baltic Exchange’s headquarters in London, maintain the existing market benchmark production and governance model, and keep end-user Baltic data fees and fees for SGX clearing of freight derivatives at current levels for at least five years. We see this as another avenue for SGX’s to expand its offerings as current market conditions are fairly challenging, especially for its equities trading business. We are maintaining our HOLD rating and fair value estimate of S$7.36.  

Source: OCBC Research - 5 Aug 2016