BURSA BUYS BACK 25PC STAKE FROM CME

This will enable firm to streamline assets, expand offerings

BURSA Malaysia Bhd is buying back a 25 per cent stake in Bursa Malaysia Derivatives Bhd (Bursa Derivatives) from CME Group Strategic Investments LLC for an initial RM162.47 million.

Bursa Malaysia said in a statement yesterday the additional sum for the stake buyback will be determined later.

This comes after the exercise of the put option as prescribed under an agreement in 2009.

Back then, Bursa Malaysia had sold a 25 per cent stake in Bursa Derivatives to CME Group for RM55.6 million to expand Malaysia’s crude palm oil futures in the global marketplace.

Bursa Malaysia said yesterday the buyback will enable it to streamline its assets and expand its offerings in the derivatives business. The valuation of the 25 per cent stake is based on a preagreed formula in the shareholders’ agreement.

The acquisition will be funded by the disposal of a portion of the quoted shares (outside Malaysia) owned by Bursa Malaysia.

The additional sum will be based on 25 per cent of the 70 per cent of Bursa Derivatives’ operating pre-tax profit for the second and third quarters of the year ending Dec 31.

The additional sum is based on the fact that CME Group remains as a 25 per cent shareholder of Bursa Derivatives until the completion of the acquisition, which is expected by early December.

Based on Bursa Derivatives Group’s audited financial statements in December last year, the net profit and net assets attributable to the 25 per cent stake were RM6.57 million and RM12.29 million, respectively.

Bursa Derivatives Group includes Bursa Malaysia Derivatives Clearing Bhd, a whollyowned subsidiary of Bursa Derivatives.

Bursa Malaysia said CME Group and Bursa Derivatives will maintain their strategic relationship, which has been successful in expanding Bursa Derivatives’ crude palm oil (CPO) futures contract internationally.

“Today, Bursa Derivatives operates the most liquid and successful CPO futures contract in the world. The extension of the CME Globex services will continue to provide global visibility, accessibility and connectivity to Bursa Derivatives’ products listed on CME Globex.”

Bursa Malaysia said Bursa Derivatives and CME Group will establish a joint working group to explore opportunities to develop and market new products.