* Baltic Exchange privately owned by 380 shareholders
* Potential deal valued at about $100 million - source (Updates with SGX, Baltic Exchange confirmation)
By Anshuman Daga and Jonathan Saul
SINGAPORE/LONDON, May 25 (Reuters) - The Singapore Exchange(SGX) is in exclusive talks to buy London's BalticExchange, which has been at the heart of the global shippingindustry for centuries, the two companies said on Wednesday.
Founded in 1744, the Baltic Exchange is no longer a forumfor chartering vessels but owns benchmark indexes for globalshipping rates and provides a trading platform for themulti-billion dollar freight derivatives market.
The takeover talks come as the global shipping industrygrapples with the worst market conditions for decades after aslump in commodity markets coincided with an increase in thenumber of vessels, sending freight costs to record lows.
Earlier on Wednesday, sources told Reuters the Baltic andSGX had entered into advanced talks, with one putting the valueof a potential deal at about $100 million.
The Baltic and SGX said in a statement later they hadentered a period of exclusivity which would expire on June 30.
"The board considers this proposal is an excitingdevelopment for the Baltic and all the stakeholders in themarkets it serves," Baltic Chairman Guy Campbell said in astatement.
"SGX has indicated that in the event its bid is successful,it would maintain the current model for the Baltic business andour presence and building in London, as the platform for theBaltic's future growth," he said.
The Baltic is owned by about 380 shareholders, many from theshipping industry. It produces daily benchmark rates and indexesused around the world to trade and settle freight contracts.
The Baltic said it would hold joint meetings with the SGX,shareholders and wider members in the coming weeks to explainthe terms of the proposal before presenting an agreement whichcould form the basis of a recommendation to shareholders.
SGX said there was no assurance the exclusive talks wouldlead to any definitive agreement.
A purchase by SGX would boost new Chief Executive Loh BoonChye's plans to diversify its revenue streams at a time when ithas been hit by sluggish equity listings and securities volumes.
Loh said on Wednesday SGX recognised the "integral role" theBaltic Exchange played within the shipping community, "which wehope to develop for the benefit of the industry as a whole".
In late February, the Baltic Exchange confirmed it hadreceived a number of "exploratory approaches" after SGX said itwas seeking to buy the London shipping exchange.
The London Metal Exchange, CME Group, ICE, state-run conglomerate China Merchants Group and Platts were among other potential bidders, sources toldReuters previously.
SGX sees huge long-term potential for freight derivativesand clearing and it has launched new products to increase theappeal of its Asian pricing benchmarks for commodities such asiron ore, liquefied natural gas and coking coal.
A deal would also fit well with Singapore positioning thecity-state as a leading hub for financial services, commoditiestrading and shipping. (Editing by Veronica Brown and David Clarke)
Clarkson (CKN)