Tiger sniff: The next US presidential election is undoubtedly the current hot spot in the world, and the head of Bloomberg Group is one of the candidates. His personal political and business actions have also attracted much attention. There is current Wall Street news that Microsoft may buy Bloomberg. If the rumor is true, what effect will this move have on the two giants? How will transactions work? This article is from: Tencent Technology , picture from: Bloomberg official website screenshot
Microsoft is the world’s largest business software company, and Bloomberg Group is the well-known “financial media empire” in the United States and even the world. There are rumors in the group that with the head of the Bloomberg Group participating in the presidential election, Microsoft may buy Bloomberg Group, and foreign media analyze that if this purchase transaction does occur, there are indeed many reasonable factors.
It is well known that Michael Bloomberg, the owner of Bloomberg Group, is running for president of the United States.
According to foreign media reports, Bloomberg, a US billionaire and former New York Mayor, officially announced his participation in the 2020 US presidential election last weekend, and he has invested tens of millions of dollars in television advertising.
As early as December last year, Bloomberg said that if he was running for president, he would either sell the company or put it under a confidential trust. (Trustees are unaware of investment methods, such as those used by politicians to avoid their business from affecting their policy decisions) .
“But I think at my age, if there is a possibility of selling the company, I would do it,” Bloomberg continued. “Someday you will die, so you want to finish before that.”
Bloomberg’s comments and the fact that he is now officially participating in the U.S. presidential campaign have sparked debate among Wall Street people about what will happen next to Bloomberg, whether it will be acquired, and which outside companies have the ability to acquire it .
In the press’s conversation with financial professionals in New York and London, a name kept emerging: Microsoft Corporation.
Wall Street bankers, traders and industry consultants believe that if Bloomberg Group sells, Microsoft will be the main contender for the company.
To be clear, these people have no inside information on any deal negotiations, and Bloomberg spokesman Ty Trippet told an American media: “The company is not for sale.”
What’s good for Microsoft
Nevertheless, U.S. media spoke with technology and financial industry observers, analysts, and consultants to assess whether the Microsoft-Bloomberg Group deal makes sense.
The judgments are not exactly the same. Most people interviewed by foreign media said that the deal is very suitable for Microsoft, but the acquisition itself will be complicated.
Experts specifically said that the acquisition is meaningful to Microsoft, because Bloomberg Group is a treasure trove of financial services data, which may benefit Microsoft ’s cloud computing business and help it win widespread cloud Customers in the financial services industry welcomed by the computing industry.
Bloomberg Group is a large financial data provider, trading platform and news media. The company’s Bloomberg terminal software system is used by 325,000 financial services practitioners who become members to pay a one-time $ 24,000.
“Bloomberg is an excellent source of financial information with a large user base,” Nucleus Research analyst Daniel Herman told the media. “Microsoft will gain a user base and all these customers.”
He said that Bloomberg Group’s data and customers will naturally fit Microsoft’s business analytics service “Power BI”And the company ’s Dynamics customer relationship management system.
Microsoft also has technical expertise to improve Bloomberg products. A London securities practitioner told the media that the merger with Microsoft could lead to much-needed user experience upgrades to ubiquitous Bloomberg terminals.
The securities practitioner said: “Microsoft may be able to easily swallow it, then thin it, make it fat, and rewrite all the code, so that the Bloomberg terminal display looks more like this century Products. “
The acquisition may help Microsoft compete with companies including Salesforce. Salesforce has a dedicated financial cloud computing service. These cloud computing companies’ business software has essentially the same functionality, so they are starting to compete by creating products for specific industries.
For cloud computing companies, customers in the financial services industry are particularly sought after. The acquisition of Bloomberg Group will give Microsoft a huge advantage in attracting these customers.
The aforementioned analyst Elman said, “Bloomberg Group is able to make Microsoft an application provider for financial services customers. This is a lucrative customer base that everyone wants, and this will be behind their acquisitions. Main motivation. “
Erman said the acquisition could also be a gospel for Microsoft’s cloud computing business (brand is Azure) because it helps Demonstrate the strength of the company’s infrastructure services.
Ellman said: “Being able to handle the business of a large company like Bloomberg Group is a huge boost for Microsoft. The company can tell customers to see that we run this service entirely on our own.”
Microsoft has long been the runner-up in the cloud computing market worldwide, second only to the market-leading Amazon.
Gartner, a US technology market research firm, said in a report released this summer that Amazon’s cloud computing business had a market share of 47.8% in 2018 and Microsoft’s market share of 15.5%, equivalent to Amazon’s three-pointer. one.
Microsoft can not only use Bloomberg’s financial data for business applications, but also provide it to developers who develop applications on the Microsoft cloud computing platform.
“I think Bloomberg Financial data will be a key data source for applications on Azure. This is where the value of this transaction is,” Moore Head, chief analyst at Moorhead Inc. in the United States, toldThe media, “The acquisition of Bloomberg Group will strengthen Microsoft’s strength against Amazon and Google’s cloud computing business.”
Moore said that Bloomberg Terminal also has an internal chat service, “This service seems to be in line with Microsoft’s product line, which is equivalent to the super-secure version of Microsoft’s corporate chat tool Teams.”
Bloomberg is also a social platform for financial professionals in some ways. The company’s businesses are very suitable for Microsoft related products, including LinkedIn, a white-collar professional social network, and GitHub, a professional platform for software engineers.
News Business
Before that, Microsoft had withdrawn from the news business.
Microsoft and NBC established MSNBC TV in 1996, but Microsoft eventually withdrew its capital. In 2005, it first sold its shares in MSNBC TV channels and in 2012 sold its online news site MSNBC.com.
Today, Microsoft still operates the company’s online portal, MSN, but it does not provide original news content. Instead, it aggregates news content provided by media partners, including the New York Times, Reuters and Bloomberg.
The aforementioned analyst Elman said that Bloomberg’s news business is not Microsoft’s strength. For Microsoft, it is most reasonable to split the business when acquiring the Bloomberg Group, and Microsoft may give up Bloomberg’s news media business.
Ellman said: “Microsoft has always been very good at maintaining core competitiveness. Microsoft will target data and customers and stay away from businesses or assets that are not related to these goals.”
Also, given the recent controversy over Amazon cloud computing and the Washington Post, Bloomberg Group’s news business may be less attractive to Microsoft.
Not long ago, Amazon and Microsoft were bidding for a US $ 10 billion Pentagon cloud computing contract at the same time. Amazon was once considered a leader, but Microsoft finally won the contract.
In a statement, Amazon questioned the final bid on the grounds of “obvious bias.” According to reports, US President Trump intervened in the bidding process, and in the past Trump and Amazon boss Bezos had a bad relationship with his personally-owned Washington Post.
If Microsoft comes to buy Bloomberg Group, one possible model is to spin off the news business and then let users pay to read the news on the Bloomberg terminal.
Prior to this, Bloomberg Group has obtained content licenses from media publishers such as The New York Times and The Washington Post. Recently, Bloomberg also added the Dow Jones News Reports library on the terminal. This move has already affected the editorial department of Bloomberg News. Some reporters questioned that if Bloomberg could obtain the content of external media reports, it would need to “support” Your own reporter?
Transaction Template
Thomson Reuters Group can be said to be the biggest competitor of Bloomberg Group, and it can serve as a model for Microsoft’s acquisition of Bloomberg Group.
In 2018, the Blackstone Group acquired the Thomson Reuters Group Financial Data and Risk Division for approximately $ 20 billion ( Later the brand name was changed to Refinitiv) majority stake. Today, legal, tax, accounting and Reuters news businesses remain part of the publicly traded Thomson Reuters Group.
As part of the transaction, Refinitiv has reached a 30-year cooperation agreement to pay Reuters News and Content to Thomson Reuters Group.
It turns out that Refinitiv, including the Eikon terminal, is a “Citronella”. In August this year, the London Stock Exchange Group offered 27 billion U.S. dollars to acquire the financial data company.
September this year, the Hong Kong Stock Exchange also participated in the bid, reporting $ 37 billion for Refinitiv. Refinitiv declined the offer.
How transactions work
Experts said that Microsoft is one of the few companies capable of acquiring the Bloomberg Group. According to financial data company FactSet, as of the end of the third quarter, Microsoft had more than $ 130 billion in cash available for mergers and acquisitions, the largest of any listed company.
The two companies have some similarities in corporate culture. Microsoft co-founders Bill Gates and Bloomberg are very concerned about charity, and charity has become part of the culture of both companies.
But acquiring a company as large as Bloomberg is not easy.
Earlier, MicrosoftThe company spent $ 26.2 billion on the acquisition of LinkedIn, a white-collar social network, the largest acquisition in Microsoft’s history.
But the purchase price of Bloomberg Group may be much higher. LinkedIn’s 2015 revenue was $ 2.99 billion. (one year before Microsoft acquired the company) . People familiar with the matter told the media that Bloomberg Group had revenues of more than $ 10 billion in 2018. According to an 2016 estimate, Bloomberg Group’s capital was valued at $ 54 billion. The managing director of a top investment bank told the media that Bloomberg Group’s valuation can be as high as $ 70 billion.
But the banker said that Bloomberg Group also has significant structural complexity.
The banker revealed that as an unlisted private company, Bloomberg Group allows its employees to develop new projects freely, even if these projects are temporarily unable to increase the company’s revenue.
The banker said: “Bloomberg has a lot of secret projects because they don’t need to report financial results every quarter. If other companies acquire Bloomberg, how will they deal with these real structural differences?”
Bloomberg also has a unique set of financial staff. The company’s financial department is managed by the United States Galler Company (Geller) . Geller was founded by Martin Geller, who was an accountant with Bloomberg when he founded the company.
Patty Roskill, chief financial officer of the Bloomberg Group Management Board, is reportedly a partner of Geller. “I don’t think it’s as easy as people think,” said the banker.
The above bankers said that if Microsoft acquired Bloomberg Group, it might consider divesting some of Bloomberg Group ’s businesses, such as the legal research department (belonging to a membership purchase Business) , but the businesses of the Bloomberg Group as a whole are stronger.