Microsoft announced on Monday, December 12 that it had agreed to purchase a 4% stake in the London Stock Exchange Group (LSEG) for $2 billion.
This acquisition by Microsoft is part of a more significant trend of large tech companies blurring the boundaries between tech and finance. Microsoft has had a longstanding relationship with the London Stock Exchange Group and the deal will bring a “meaningful” upside to revenues for the company post-2025.
Microsoft deal expected to be complete in early 2023
Microsoft will buy the LSEG shares from the Blackstone/Thomson Reuters Consortium and is expected to complete the purchase in the first quarter of 2023.
The partnership will enable the digital transformation of LSEG’s technology infrastructure and Refinitiv platforms onto the Microsoft cloud. The two companies will look into shifting trading or clearing activities to the cloud.
Microsoft and LSEG will also look at how to work together to improve interoperability between LSEG Workspace and Microsoft Teams, Excel and PowerPoint along with other Microsoft applications. Microsoft will also make a contractual commitment for minimum cloud-related spending with Microsoft of $2.8 billion over the partnership term.
Analysts have commented that the deal could “transformationally” broaden the appeal of LSEG’s Workspace with a potentially compelling alternative to Instant Bloomberg available for the first time.
The European Union has just approved a law introducing safeguards on cloud providers in financial services, and the U.K. is set to follow suit. This deal is expected to help LSEG’s revenues, but the specifics of the expected gains are still unclear.