Microsoft buys 4% of the London Stock Exchange as part of a billion-dollar deal to collaborate on data analytics and cloud technology.
The American technology company buys the stake of a consortium of Blackstone and Thomson Reuters and takes a seat on the board of the London Stock Exchange Group (LSEG). The consortium previously sold financial data company Refinitiv to LSEG in a £22bn takeover.
The latest deal will unite the London Stock Exchange with one of the world’s most powerful technology companies. The LSEG, a self-run member of the FTSE 100 stock market index, has close ties to the UK government and is likely to play a key role in ministers’ hopes of revitalizing the City of London.
The share purchases are likely to be welcomed by investors in the LSEG, which is led by its CEO, David Schwimmer. Share price of LSEG rose 4% in early trading on Monday, making it the biggest gainer on the FTSE 100.
Financial data companies, including LSEG, Bloomberg and S&P Global, are scrambling to provide new tools for investors and analysts to sift through the vast amounts of data for investment opportunities.
Microsoft and LSEG said they had agreed on a 10-year “strategic partnership for next-generation data and analytics solutions and cloud infrastructure solutions,” overseen on the LSEG’s board by Scott Guthrie, Microsoft’s executive vice president of cloud and artificial intelligence.
LSEG will move its data processing and cloud services to Microsoft, as well as use its office software and integrate the technology it offers to financial industry professionals with Microsoft.
The deal will cost LSEG between £250m and £300m in new out-of-pocket costs, and the company expects to spend at least $2.8bn (£2.3bn) on cloud services with Microsoft over the decade. That expenditure could rise as demand for new services increases, LSEG said.
In a statement to the exchange on Monday, LSEG said the deal is “expected to significantly increase LSEG’s revenue growth over time as new products come to market.”
said, “Advances in the cloud and AI will fundamentally change the way financial institutions research, interact with and transact across asset classes, and adapt to changing market conditions.”
The companies will work together to “generate business insights, automate complex and time-consuming processes and ultimately do more with less,” he said.
Schwimmer said it was an important milestone that will transform the experience for its customers.
“We are pleased to welcome Microsoft as a shareholder. We believe our partnership with Microsoft will transform the way our clients discover, analyze and trade securities around the world, creating substantial value over time,” he added.