Microsoft to acquire stake of 4% in London Stock Exchange group, enters into cloud partnership

Microsoft has entered into a long-term strategic partnership with the London Stock Exchange Group (LSEG), wherein the tech giant will acquire a stake of 4% in the stock exchange and collaborate on cloud tech and data analytics. The partnership between the two is for a period of ten years, which will see Microsoft take a seat on LSEG’s board and unite a big global cloud company with a leading stock exchange and one of the largest financial data companies.

According to an official statement, Microsoft will be acquiring LSEG’s shares from a consortium that consists of Blackstone and Thomson Reuters, which had sold financial data player Refinitiv to LSEG for $22 billion three years ago. The statement added that the joining of Microsoft and LSEG’s forces would “build on the good progress” made by the latter on the acquisition of Refinitiv, as well as “enhance its position as a world-leading financial markets infrastructure and data provider.”

What does the deal entail for both companies? For one, it commits LSEG to spend $2.8 billion over the next decade on Microsoft products, while it can avail Microsoft’s Cloud and AI tech and ensure a collaboration to create its “data infrastructure and build intuitive next-generation productivity, data and analytics and modeling solutions with Microsoft Azure, AI, and Microsoft Teams.” For another, its data platform and other technology infrastructure will migrate into Microsoft’s Azure cloud environment, thereby enhancing its current “cloud migration strategy” and ensuring a further teaming up of data analytics and cloud technology.

In time, Scott Guthrie, who is Microsoft’s Executive Vice President, Cloud and AI Group, will be appointed as a non-executive director of LSEG. The purchase of LSEG shares from the consortium is expected to close in the first quarter of next year.

What does it change for users? For one, LSEG customers will be able to utilize Microsoft Teams to collaborate with each other. They can also present concepts in a simpler form with Excel or PowerPoint.

And as LSEG’s data platform and other key tech infrastructure move to Microsoft Azure, it will become “interoperable with certain Microsoft applications.” This agreement will cost LSEG between £250m and £300m in new cash costs, and its expenditure on cloud services with Microsoft could rise if demand for new services increases. And over time, it is expected to bolster its growth of revenue “meaningfully” as “new products come on-stream.”

“This strategic partnership is a significant milestone on LSEG’s journey towards becoming the leading global financial markets infrastructure and data business and will transform the experience for our customers. Bringing together our leading data sets, analytics, and global customer base with Microsoft’s comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies,” said David Schwimmer, CEO, of LSEG.

“We are delighted to welcome Microsoft as a shareholder. We believe our partnership with Microsoft will transform the way our customers discover, analyze, and trade securities around the world, and create substantial value over time. We look forward to delivering on that potential,” he added.