Microsoft to buy 4% stake in London Stock Exchange

Date:

Dec. 12 (Reuters) – Microsoft (MSFT.O) is taking a 4% equity stake in London Stock Exchange Group (LSEG.L) as part of a 10-year commercial deal to migrate the exchange operator’s data platform to the cloud. The British company reports this on Monday.

It is the latest sign of closer ties between financial services firms and a handful of major global cloud companies such as Microsoft, Google (GOOGL.O), Amazon (AMZN.O) and IBM (IBM.N), prompting regulators to look closer at the ties. see.

Microsoft has longstanding ties to LSEG, but the exchange group’s Chief Executive, David Schwimmer, said they began talks about closer ties about a year ago.

“It’s a long-term partnership. In terms of the products we’re going to build together, I expect our customers to start seeing the benefits of that in 18 to 24 months and we’ll build from there,” Schwimmer told Reuters.

Regulators have raised concerns about financial firms’ over-reliance on too few cloud providers, given the disruption it could cause across the industry if one provider goes down.

The European Union has just passed a law introducing safeguards for cloud providers in financial services, and Britain will follow suit.

“You have to assume we don’t like to surprise our regulators,” Schwimmer said when asked if LSEG made sure regulators were on board.

LSEG said the link with Microsoft was a partnership to reap the benefits of “consumption-based pricing,” not a traditional cloud deal.

“We will continue to maintain our multi-cloud strategy and continue to work with other cloud providers,” said Schwimmer.

The deal was not about savings from outsourcing operations to the cloud, but about meaningful incremental revenue growth as new products are deployed over time.

“This feels like an important milestone in LSEG’s journey to be information solutions focused, even if ‘meaningful’ revenue growth data is lacking,” said Jefferies analysts.

As part of the deal, LSEG has made a contractual commitment to minimum cloud-related spend with Microsoft of $2.8 billion over the life of the partnership.

Microsoft said the foundation of the partnership will be the digital transformation of LSEG’s technology infrastructure and Refinitiv platforms to the Microsoft Cloud.

The initial focus will be on delivering interoperability between LSEG Workspace and Microsoft Teams, Excel and PowerPoint with other Microsoft applications, and a new version of LSEG’s Workspace.

LSEG shares were up 4% in early trading.

LSEG bought Refinitiv for $27 billion from a consortium of Blackstone and Thomson Reuters, making the exchange the second largest financial data company after Bloomberg LP.

LSEG has made “good progress” on its program to deliver its cloud-based data platform since the completion of the Refinitiv acquisition in January 2021, it said in a statement.

Microsoft will buy LSEG shares from the Blackstone (BX.N)/Thomson Reuters (TRI.TO) Consortium, the exchange operator said.

Thomson Reuters, owner of Reuters News, has a minority stake in LSEG following the Refinitiv deal.

The purchase of Microsoft is expected to close in the first quarter of 2023.

Reporting by Yadarisa Shabong in Bengaluru; Edited by Nivedita Bhattacharjee, Jane Merriman and Louise Heavens

Our Standards: The Thomson Reuters Principles of Trust.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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