Marex set to buy ED&F Man brokerage for $235 million

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Marex set to buy ED&F Man brokerage for $235 million

According to people familiar with the matter, the deal to buy the bulk of ED&F Man Holdings Ltd.'s brokerage business for $235 million is close to being completed, cementing its position as one of London's largest commodities dealer.

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There are discussions over the sale of ED&F Man Capital Markets in the final stages and an announcement on progress could come as early as this week, said the people who requested anonymity to discuss the terms of the deal.

The sale would be one of the last steps in the restructuring of ED&F Man after the trader - best known for hauling sugar and coffee -- got the green light to ring-fence its commodities business and restructure about $1 billion in debt beyond 2025.

Marex has been aggressively expanding its business over the past few years, buying rival brokerages. The deal will consolidate Marex's position as one of the largest brokers on the London Metal Exchange, while further downsizing the number of dealers on the bourse's historic open-outcry trading floor.

ED&F Man is expected to resign its membership once the deal goes through, reducing the number of active dealers on the Ring to eight, some people said.

The deal will indemnify Marex against ED&F Man's potential exposure to a metals warehousing fraud in 2017 and a dividend tax fraud investigation in Denmark, the people said.

About a dozen metals traders have left ED&F Man Capital Markets and are about to join Sigma Broking, some people said. At the beginning of the year, Sigma set up a floor-trading team in a contrarian bet on its revival after an 18 month closure during the Pandemic.

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