Microsoft signed a 10-year agreement with the London Stock Exchange Group and acquired a share of around 4% of the company.

Microsoft, a major player in American technology, established a 10-year agreement with the London Stock Exchange Group on Monday and acquired a share of around 4% in the company that runs the British stock exchange.

According to a statement by the LSEG, the relationship includes cloud computing technologies as well as next-generation data and analytics. It features analytics and modelling solutions using Microsoft Azure, AI, and Microsoft Teams as well as a new data infrastructure for the London Stock Exchange.

On Monday, LSEG's stock rose 4% in Europe.

According to LSEG CEO David Schwimmer, "This strategic relationship marks a key milestone on LSEG's journey toward becoming the top global financial markets infrastructure and data firm and will improve the experience for our customers."

With the introduction of new products, the move is anticipated to increase LSEG's revenue growth significantly over time; however, the EBITDA margin will be negatively impacted by 50 to 100 basis points due to the $250 million to £300 million in total incremental cash costs over the years 2023 to 2025.

There is a required commitment by LSEG that a 10-year contract with Microsoft requires LSEG to spend a minimum of $2.8 billion on cloud-related items.

As a result of the agreement, multiple Microsoft products will be employed throughout several LSEG business units.

The data platform for the stock exchange as well as other crucial technological infrastructure will be moved into Microsoft's cloud, which is based on Azure, its huge public cloud offering.

This is "compatible with existing long-term" spending plans, according to the stock exchange.

Additionally, Microsoft and LSEG will collaborate on the creation of fresh solutions for corporate cooperation. Workspace is a platform for data and analytics that LSEG has created. The two businesses will collaborate to develop this product and include it into Microsoft Teams, the company's messaging platform.

LSEG will nominate Scott Guthrie, Microsoft's executive vice president for the Cloud and AI Group, as a non-executive director, according to the press release.

Microsoft Chairman and CEO Satya Nadella stated: "Advances in the cloud and AI will fundamentally revolutionise how financial institutions research, engage and transact across asset classes, as well as respond to shifting market conditions."

In a deal estimated at $27 billion, the London Stock Exchange previously agreed to acquire the financial information company Refinitiv.

(Sources: CNBC.com, proactiveinvestors.co.uk, investing.com)