Microsoft (MSFT) is buying a 4% stake in the London Stock Exchange in a deal that will see the market operator spend at least $2.8 billion over 10 years on the software provider’s cloud services.
The companies announced the partnership in a joint statement on Monday, touting the benefits it will bring to exchange clients through improved data and analytics. Shares of the London Stock Exchange Group (LSEG) gained 4% in early trading.
The partnership “creates attractive revenue growth opportunities for both companies,” LSEG CEO David Schwimmer said in the release.
As part of the agreement, the London Stock Exchange’s data platform and other technology infrastructure will migrate to Microsoft’s Azure cloud environment.
The companies also plan to work together to develop new products and services for data and analytics using Microsoft Azure, Microsoft Teams and Microsoft’s artificial intelligence (AI) capabilities.
For starters, the exchange will be able to share its data and analytics with Teams and Microsoft 365, which includes Excel and PowerPoint.
“The partnership will build on the good progress LSEG has made in integrating Refinitiv and strengthen its position as the world’s leading financial market infrastructure and data provider,” the statement said.
LSEG completed its acquisition of Refinitiv for $27 billion last year, making it the second-largest financial data company after Bloomberg. Its data and analysis activity represents two-thirds of the group’s revenues.
The agreement with Microsoft includes a commitment from LSEG to spend at least $2.8 billion on the software provider’s cloud-related products and services over the 10-year term of the partnership. This is in line with existing long-term spending plans, the statement said.
Microsoft will buy back its LSEG shares from Blackstone and Thomson Reuters (TRI). The purchase is expected to be finalized in the first quarter of 2023.