PETALING JAYA: Bursa Malaysia Bhd is buying the remaining 25% stake in Bursa Malaysia Derivatives Bhd (BMD) from CME Group Strategic Investments LLC for RM162.47 million as well as an additional sum which will be determined later.
This comes after the exercise of the put option as prescribed under an agreement entered into on November 30, 2009.
Bursa also extended its agreement with Chicago Mercantile Exchange Inc to host BMD’s products on CME Globex until September 2025, with the option of successive renewal terms of three years thereafter.
Bursa said the acquisition will enable the group to streamline its assets and expand its offerings in the derivatives business.
The valuation of the 25% equity interest is based on a pre-agreed formula as prescribed in the shareholders agreement. The acquisition will be funded by the disposal of a portion of the quoted shares (outside Malaysia) owned by Bursa.
The additional sum will be based on the 25% of the 70% of BMD’s operating profit before tax for the second and third quarters of the financial year ending December 31, 2019.
The additional sum is arrived at based on the fact that CME Group remains as a 25% shareholder of BMD until the completion of the acquisition, which is expected by early December 2019.
Based on Bursa Derivatives Group’s (which includes Bursa Malaysia Derivatives Clearing Bhd, a wholly owned subsidiary of Bursa Derivatives) audited financial statements as at 31 December 2018, the net profits and the net assets attributable to the 25% equity interest was RM6.57 million and RM12.29 million, respectively.
Bursa noted that CME Group and BMD will continue to maintain their strategic relationship which has been successful in expanding BMD’s crude palm oil futures (FCPO) contract internationally.
“Today, BMD operates the most liquid and successful FCPO contract in the world. The extension of the CME Globex services will continue to provide global visibility, accessibility and connectivity to BMD’s products listed on CME Globex.”
Apart from that, BMD also entered into a non-binding strategic cooperation agreement (SCA) with CME, signifying CME’s commitment to the Malaysian derivatives market.
“Under the SCA, CME and BMD will establish a joint working group to explore opportunities to develop and market new products.”
At the noon break, Bursa’s share price gained 4 sen or 0.7% to RM6.19 on 100,500 shares done.