Microsoft has bought a 4 per cent stake in the London Stock Exchange Group (LSEG) as part of a 10-year deal that will result in the stock exchange operator's data platform moving into the cloud.
Under the partnership arrangement, Microsoft and the LSEG will have a minimum spend of $2.8 billion in LSEG's cloud operations, which will result in the digital move of the bourse operator's technology infrastructure and Refinitiv platforms on to the Microsoft Cloud.
LSEG told investors that the total costs for the partnership could be between $300 million and $350 million over the next three years, which could hit its profit margins during that time as a result of the one-off costs.
“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,” Microsoft said.
David Schwimmer, the chief executive of LSEG, said: “This strategic partnership is a significant milestone on LSEG's journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers.
“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.”
Refinitiv, which provides financial market data and infrastructure, was formed in 2018 and bought by LSEG a year later for $27 billion from a Blackstone and Thomson Reuters' consortium.
The move turned the exchange into the second-largest financial data company after Bloomberg.
Under the deal, Microsoft will buy LSEG shares from the Blackstone and Thomson Reuters consortium.
Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG following the Refinitiv deal.
The sale of 4 per cent of LSEG to Microsoft is expected to be completed in the first quarter of 2023.
Under the new partnership, Microsoft's executive vice president of its cloud and artificial intelligence group, Scott Guthrie, will become a non-executive director of LSEG, subject to approvals.
LSEG shares were 4 per cent higher in morning trade on Monday.