London, 18 February 2010 - US investment bank Goldman Sachs is buying global warehouser Metro International Trade Services, with the deal likely to be completed soon, a Metro source said on Thursday.
The value of the deal has not yet been disclosed.
"For Goldman the deal is just an investment - they are not going to interfere with our operations or alter the management," he said. "Everything stays the same. The board of directors stays independent."
"It [the deal] is going through at the moment. I gather that the Metro people are informing their customers in meetings," a trader source said.
Metro specialises in the worldwide storage of non-ferrous base metals - it is a LME-recognised and stores exchange-deliverable material. The Metro source said the firm’s headquarters will remain in Detroit.
This deal, coming soon after JP Morgan effectively acquired another LME-related warehouser, has implications for the metal storage and financing market, metal traders said.
"With JP Morgan buying Henry Bath in effect [via the purchase of RBS Sempra Commodities], it is a case of the metal/financing/warehousing chips going into strong hands," the trader source added.
Earlier this week, Sempra Energy and UK-listed Royal Bank of Scotland (RBS) agreed to sell the European and Asian operations of their RBS-Sempra Commodities joint venture to JP Morgan Chase & Co for an expected $1.7 billion.
"It should not really happen. What you have got effectively is trading houses controlling the availability of stocks," another trader said, warning against the risk of the two banks obtaining better financing terms from warehouses.
"The LME has no rule against it," the second trader added.
One of the units that JP Morgan is acquiring from RBS-Sempra Commodities is LME ring dealer member (RDM) RBS Sempra Metals, which is an affiliate of RBS Sempra Metals & Concentrates LLC, a global metals and concentrates merchant.
Another is Henry Bath & Son Ltd, an LME-approved warehouse company. JP Morgan Securities, a subsidiary of JP Morgan Chase, is also an LME associate broker clearer member (ABCM). Goldman Sachs is also an LME ABCM.
(Additional reporting by Perrine Faye)