LSE shares climb 4.5% at the open, Microsoft to acquire 4% stake as part of 10-year cloud deal

Shares of London Stock Exchange Group (LON:LSEG) jumped 4.5% at the start on Monday after the company announced a transaction in which Microsoft (NASDAQ:MSFT) would purchase a 4% investment in the exchange operator.

Microsoft's investment is in exchange for a significant commitment to update LSE's cloud-based services, with a minimum investment of £2.3 billion (£1=$1.2205) over ten years in cloud services delivered by Microsoft's Azure Purview and Azure Synapse.

Over the next three years, between £250M and £300M will be spent. This will reduce the group's operating margin before interest, taxes, depreciation, and amortisation by between 50 and 100 basis points. The group said that by putting a lot of money into data services, its income would grow "meaningfully" over time, which would let it make a lot of new products.



The companies didn't say how much Microsoft would pay for its stake, but at Friday's closing price, the 4% stake was worth about £1.7 billion on the LSE.

The deal comes right after one of Microsoft's most ambitious mergers and acquisitions when it tried to buy the company that makes video games, Activision Blizzard. Even though the LSE partnership needs approval from the government, it is unlikely to face any problems. Scott Guthrie is the executive vice president of Azure and is likely to join the LSE as a non-executive director.

FAQ:

1. Was LSE closed when the Queen died?
   The London Stock Exchange was closed on the day of the funeral of Her Majesty the Queen.
2. Bill Gates: Does he own Microsoft?
   Gates owns 11.6% of the company between himself and the Gates Foundation.