Microsoft To Get 4% Stake, 10-Year Partnership In $2.8B Deal With London Stock Exchange: What You Should Know

Microsoft Corp. MSFT announced on Sunday an investment in London Stock Exchange Group plc LNSTY and a strategic partnership with the exchange.

What Happened: Microsoft said it has agreed to buy about a 4% equity stake in LSE through certain investment funds affiliated with a consortium comprising BlackRock Inc. BLK and Thomson Reuters. The share purchase, which is subject to customary antitrust and regulatory approvals, is expected to close in the first quarter of 2023.

Microsoft and LSE have also executed a separate agreement regarding the lockup of the shares purchased by the former, which prevents the sale of shares in the first year following the purchase and the sale of over half of the shares during the second year.

Long-term Partnership: Microsoft and LSE also entered into a new 10-year strategic partnership to build the latter’s data infrastructure using the Microsoft Cloud. The two partners will also jointly develop new products and services for data and analytics.

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LSE’s data platform and other key tech infrastructure will migrate to Microsoft’s Azure cloud and the exchange’s data and analytics workflow solution called the “Workspace” will become interoperable with certain Microsoft applications. New innovative cloud-based analytics services are also in the works.

The companies have also agreed to work on developing digital market infrastructure based on cloud technology that will help traders interact with capital markets across a broad range of asset classes.

“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,” said David Schiwmmer, CEO of LSE.

Satya Nadella, Chairman and CEO of Microsoft, said, “Advances in the cloud and AI will fundamentally transform how financial institutions research, interact and transact across asset classes and adapt to changing market conditions."

LSE’s total incremental cash costs related to the programs, running from 2023 through 2025, are expected at 250 million pounds to 300 million pounds ($306 million to $367 million). The exchange has also committed to a minimum cloud-related spend with Microsoft over the life of the agreement, amounting to $2.8 billion, with the spending weighted toward the second half of the agreement period.

Price Action: Microsoft closed Friday’s session down 0.80%, at $245.42, according to Benzinga Pro data.

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