Microsoft (NASDAQ: MSFT) has acquired a 4% stake in London Stock Exchange Group (LON: LSEG), which is part of a 10-year strategic partnership, the companies announced Monday morning.
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The partnership is for next-generation data and analytics and cloud infrastructure solutions, with a statement explaining that the partnership will build LSEG's data infrastructure and next-generation productivity, data and analytics, and modelling solutions with Microsoft's Azure, AI, and Teams.
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The partnership will enhance LSEG Workspace, LSEG's next-generation data and analytics workflow solution, with Teams communication and Microsoft 365 interoperability, while the company's data platform and other technology infrastructure will migrate to Microsoft Azure.
The companies believe the partnership will increase LSEG's revenue growth over time as new products come on-stream, while total incremental cash costs from 2023 to2025 are seen in the range of £250 million to £300 million, which includes around £100 million in Capex and a 50 to 100 basis points impact on EBITDA margin.
In addition, there is a contractual commitment by LSEG for a minimum cloud-related spend with Microsoft of £2.3 billion over the term of the partnership.
“Bringing together our leading data sets, analytics, and global customer base with Microsoft's comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies,” commented David Schwimmer, CEO of LSEG. “We are delighted to welcome Microsoft as a shareholder. We believe our partnership with Microsoft will transform the way our customers discover, analyse, and trade securities around the world, and create substantial value over time. We look forward to delivering on that potential.”
Microsoft Chairman and CEO Satya Nadella said in a statement that the partnership “will bring together the industry leadership of the London Stock Exchange Group with the trust and breadth of the Microsoft Cloud,” building “next-generation services” that will empower customers to “generate business insights, automate complex and time-consuming processes, and ultimately, do more with less.”
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