UPDATE: LME Committee To Dissect Bids Ahead Of Board Meeting-Source

Leaders of the London Metal Exchange will weigh preliminary bids next week for the commodity market ahead of a Feb. 23 board meeting, a person familiar with the matter said Friday.

NYSE Euronext (NYX) submitted a bid ahead of a deadline this week for expressions of interest, according to a source, while IntercontinentalExchange Inc. (ICE) and CME Group Inc. (CME) were also reported to have tabled offers to acquire the 135-year-old LME, which dominates global trade in non-ferrous metals.

"There has been a good range of companies that have submitted bids and the board will decide at its next meeting which bids will continue to phase two," said the LME's head of business development, Chris Evans.

A deal for the LME, seen by analysts as fetching an estimated one billion pounds ($1.6 billion), ranks among the smaller-scale deals left for major exchange groups to pursue after a host of potentially sector-reshaping merger plans collapsed over the past year due to regulatory hangups and nationalistic barriers.

Situated in the City of London financial district, the LME is the world's largest venue for trading metals-based derivatives, accounting for at least 80% of globally traded base metals such as copper and aluminum. Activity on its markets last year climbed by 21.9% over 2010 levels with the equivalent of 3.5 billion tons of metal traded, the LME reported in January.

Envelopes containing the bids submitted to buy the LME were opened Wednesday by adviser Moelis & Co. and will be considered at the start of next week by a committee that includes Chief Executive Martin Abbott and Chairman Brian Bender, plus board directors David Rough and Nat le Roux. After dissecting the bids they will report to a meeting of the LME board Feb. 23, according to a person familiar with the matter.

The board is likely to select four or five bids to continue to the second phase of the process, the person said. A sudden "significant" bid at the last minute that had failed to meet the Feb. 15 deadline would still be considered, the person said.

At least 10 interested parties approached the LME about a potential buyout last year. The exchange hasn't named any of the interested parties, nor said which have submitted bids.

Phase two will include discussions with the bidders and presentations from the various companies involved. The LME board would then in April decide to further refine the number of bidders, at which point the exchange's members--who are also its shareholders--would be informed. Major shareholders include J.P. Morgan (JPM), Goldman Sachs Group Inc. (GS) and Metdist.

Abbott has warned that the bidding process won't necessarily result in a sale. The value of any potential deal also remains unclear at this stage. The LME posted a pre-tax profit of GBP12.5 million in 2010, down from GBP17.3 million the previous year. Its 2011 audit hasn't been completed.

Alongside NYSE, CME and ICE, other likely bidders have been seen in the London Stock Exchange Group plc (LSE.LN), Singapore Exchange Ltd. (0068.SG) and the Shanghai Futures Exchange. Representatives of those exchange companies have declined to comment.

Besides its corner on the metals market, LME also ranks among the last exchange operators to rely heavily on a floor-based trading model, making it a potentially attractive target for bigger exchange groups that can further automate the LME's markets, reduce costs and grow volume.

About two years after IntercontinentalExchange acquired the New York Board of Trade--a similarly pit-focused market--in early 2007 and took it electronic, trading activity had grown by more than one-third and costs had come down by 30%, according to research by Keefe Bruyette & Woods.

-By Andrea Hotter and Jacob Bunge, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@dowjones.com; jacob.bunge@dowjones.com

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