HONG KONG -- Hong Kong's stock exchange operator said Friday it has agreed to buy the 135-year-old London Metal Exchange for 1.4 billion pounds ($2.2 billion), as it acts on a plan to shift into commodities to capitalize on Chinese demand.

Hong Kong Exchanges and Clearing Ltd. said it has signed an agreement with the LME to pay 107.60 pounds for each of its 12.9 million shares.

The Hong Kong bourse's offer follows plans announced earlier this year to expand into commodities, marking a major move away from its slow-growing equities business.

Hong Kong Exchanges said the LME has yet to "realize fully the growth opportunity" in Asia, especially China, and the deal would provide a platform for "significant revenue growth" as LME expands its business and operations in the region.

The exchange has "identified particular demand for commodities trading, focused around metals, to support the large and growing metals consumption in Asia, and particularly, China," it said in a statement.

Earlier this year, 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 aluminum, copper, nickel, zinc and other metals worth, on average, $61 billion a day or $15.4 trillion annually.

The Hong Kong exchange will use cash and new bank facilities of at least 1.1 billion pounds to finance the purchase.

The takeover still needs shareholder approval.

USA Today