- Michael Bloomberg's campaign said on Tuesday that he would sell Bloomberg LP if elected US president. That echoed previous comments from Bloomberg about either selling the company or putting it in a blind trust if he ran.
- In late 2019, when Bloomberg officially jumped into the race, we talked to analysts and insiders to understand what kind of deal would make the most sense. Here's the original story.
- Bloomberg LP delivered $10 billion in revenue in 2018, making any sale a sizable transaction, reducing the number of potential acquirers.
- Business Insider talked with experts last month about what company would be a leading contender to buy Bloomberg.
- Finance professionals in both New York and London have been speculating that Microsoft might buy Bloomberg. Microsoft declined to comment, while the Bloomberg spokesman Ty Trippet said "the company is not for sale."
- Still, experts say such a deal could make sense for Microsoft because Bloomberg is a treasure trove of data.
- Microsoft could use that data to win sought-after customers in the financial-services industry and compete with rivals including Amazon Web Services and Salesforce.
- The acquisition would most likely be difficult for reasons including the structural complexity of Bloomberg's business and potential conflicts of interests from Microsoft.
- Also read: Michael Bloomberg built a $54 billion company. For 2 decades, women who worked there have called it a toxic, sexually charged nightmare.
(Michael Bloomberg's campaign said on Tuesday that he would sell Bloomberg LP if elected US president. That echoed previous comments from Bloomberg about either selling the company or putting it in a blind trust if he ran. In late 2019, when Bloomberg officially jumped into the race, we talked to analysts and insiders to understand what kind of deal would make the most sense. Here's the original story as it appeared on Nov. 27, 2019.)
Billionaire Wall Streeter and former New York City mayor Michael Bloomberg officially entered the 2020 presidential race in November, dropping tens of millions of dollars on TV ads in the process.
Last December, Bloomberg said he'd either sell his namesake company or put it in a blind trust if he ran for president. "But I think at my age, if selling it is possible, I would do that," Bloomberg said then. "At some point, you're going to die anyway, so you want to do it before then."
Bloomberg's comments and the fact he's officially in the race have made what might happen to Bloomberg LP, and which companies if any are in a position to buy it, a topic of conversation for Wall Streeters.
Business Insider talked with experts last month about what company might be a leading contender to buy Bloomberg.
And in those conversations with finance professionals in both New York and London, one name kept coming up: Microsoft. Bankers, traders, and industry consultants all suggested Microsoft.
To be clear, these folks have no inside knowledge on any deal talks, and the Bloomberg spokesman Ty Trippet has told Business Insider that "the company is not for sale."
What's in it for Microsoft
Still, Business Insider talked to tech and finance industry watchers, analysts, and consultants to gauge whether a Microsoft-Bloomberg deal would make any sense. The verdict wasn't quite unanimous. Most of the people said that such a deal would be a good fit for Microsoft but that an acquisition itself would be complicated.
In particular, experts said the acquisition would make sense for Microsoft because Bloomberg is a treasure trove of financial-services data that could be a boon to the Redmond, Washington-based company's multibillion-dollar cloud-computing business and help it win sought-after customers in the financial-services industry.
Bloomberg is a massive financial-data provider, trading platform, and news provider. The company's Bloomberg Terminal software system is used by 325,000 financial-services professors who pay $24,000 for a single subscription.
"Bloomberg is the preeminent financial information source with a colossal user base," the Nucleus Research analyst Daniel Elman told Business Insider. "Microsoft would get that user base and all of those customers."
Bloomberg's data and customers would be a natural fit for Microsoft's business-analytics service Power BI and the company's Dynamics customer-relationship management, he said.
Microsoft also has the technical chops to improve some of Bloomberg's products. A London-based broker told Business Insider a deal with Microsoft could lead to a much-needed upgrade of the user experience of the ubiquitous Bloomberg Terminal.
"Microsoft might be able to swallow it quite easily and then slim it down, cut the fat, and rewrite all the code so the Terminal display looks more like it's from this century," the broker said.
The acquisition could help Microsoft compete with companies including Salesforce, which has a specific cloud for financial services. The companies' business applications basically have the same functionality, so they're starting to compete by creating products for specific industries.
Financial-services industry customers are especially sought after, and acquiring Bloomberg would give Microsoft a huge advantage in courting those customers.
"Bloomberg would allow Microsoft to be the application provider for financial-services customers, the very lucrative accounts everyone wants," Elman said. "That would be their main motivation behind it."
The acquisition could also become a boon to Microsoft's Azure cloud-computing business in the sense that it could help showcase the company's infrastructure, Elman said.
"Being able to handle something as large as Bloomberg, processing all of those transactions, would be a huge boon to Microsoft," Elman said. The company, he added, could be able to say, "Look at this service we're operating entirely on our own."
Microsoft has been the longtime runner-up in the cloud-computing business behind market-leading Amazon Web Services. Gartner in a report released over the summer pegged the 2018 market share for AWS at 47.8% and that of Microsoft Azure at 15.5%.
Microsoft not only could use the data for business applications, but it also could offer it to developers building applications on Azure.
"I could see wanting access to the data as a key data source for applications on Azure. That's what this does," Patrick Moorhead, the principal analyst at Moor Insights & Strategy, told Business Insider. "This would add firepower versus AWS and Google Cloud."
The Bloomberg Terminal also has an internal messaging service "that seems right up Microsoft's alley," Moorhead said. "It would be like a super-secure version of Teams."
Bloomberg also functions as a social platform for financial professionals in some ways. This aspect of Bloomberg fits well with other Microsoft companies, including the professional social network LinkedIn and GitHub, a professional network for software engineers.
The news side
Microsoft has already exited the news business. Microsoft and NBC established MSNBC in 1996, but Microsoft ultimately divested its stake, first selling its shares of the MSNBC television channel in 2005 and the online news site MSNBC.com in 2012.
Microsoft still operates the company's online portal MSN, but the website doesn't create original news content. Instead, it publishes content from news providers including The New York Times, Reuters, and Bloomberg.
The news side of Bloomberg's business isn't Microsoft's forte, Elman, the Nucleus Research analyst, said. It would make the most sense for Microsoft to split the businesses up, and Microsoft would most likely avoid the news side of the business.
"Microsoft has been very good about staying tight to its core competencies," Elman said. "Microsoft would be targeting data and customers and trying to stay away from all of that."
Plus, now there are politics to consider. The news side of the business would most likely be less attractive to Microsoft given what Moorhead called the recent "political controversy between AWS and The Washington Post."
AWS was considered the frontrunner in a competition for a $10 billion Pentagon cloud-computing contract that ultimately went to Microsoft. AWS is challenging the decision, citing in a statement "unmistakable bias." Some think the bidding process included interference from President Donald Trump, who has publicly feuded with Amazon CEO Jeff Bezos over his ownership of The Washington Post.
One potential model would be for Bloomberg to split off the news operation and come up with an arrangement to pay to distribute the content on its terminal.
Bloomberg already licenses content from publishers like The New York Times, The Washington Post, and Business Insider. The recent addition of broad access to Dow Jones articles to the terminal has already had an impact in the Bloomberg newsroom, Lucia Moses previously reported, with some journalists asking whether Bloomberg needed all its journalists when it had access to all these other articles.
Thomson Reuters, arguably Bloomberg's biggest rival, could serve as a template for how a deal could be done. In 2018, Blackstone acquired a majority stake in Thomson Reuters' financial and risk unit, rebranded Refinitiv, for roughly $20 billion. The legal, tax and accounting and Reuters news businesses remained part of the publicly traded Thomson Reuters.
As part of that deal, Refinitiv entered a 30-year agreement to pay Thomson Reuters for Reuters news and editorial content.
Refinitiv, which includes the Eikon terminals, has proved to be a hot commodity. In August, the London Stock Exchange Group made a $27 billion bid for the financial-data company. In September, the Hong Kong Stock Exchange threw its hat in the ring, making a $37 billion pitch for Refinitiv. Refinitiv rejected the bid shortly thereafter.
How the deal might work
Microsoft is one of the few companies that could afford to buy Bloomberg, experts told Business Insider. Estimates from FactSet show that Microsoft had more than $130 billion in cash on hand for a purchase as of the firm's latest earnings report — the most of any public company.
And culturally, the two companies share some similarities. The Microsoft cofounder Bill Gates and Bloomberg have a big focus on philanthropy that's become part of the companies' identity.
But an acquisition of a company as big as Bloomberg wouldn't be simple.
Microsoft paid $26.2 billion to acquire LinkedIn in its largest acquisition, but the price for Bloomberg is likely to be much higher. LinkedIn's revenue was $2.99 billion in 2015, the year before Microsoft acquired the company. Bloomberg's 2018 revenue was more than $10 billion, insiders told Business Insider.
One estimate from 2016 put Bloomberg's valuation at $54 billion. A managing director at a top-tier investment bank told Business Insider it could go for as much as $70 billion.
But the data giant also has its fair share of structural complexities, the same banker said.
As a private company, Bloomberg has also had the luxury of giving many of its employees the freedom to develop new projects that aren't immediately helping to drive revenue, the source added.
"There's a lot more kind of skunk-work stuff that goes on there because they're not reporting quarterly earnings," he said. "If somebody does something with Bloomberg, how do they deal with these real structural differences?"
The company also has a unique setup when it comes to its financial officers. Bloomberg's finance division is run by Geller & Company, founded by Martin Geller, who served as Michael Bloomberg's accountant when he started the business. Patti Roskill, the CFO who sits on Bloomberg's management committee, is a partner at Geller & Company.
"I don't think it's as easy as people think," the banker said.
And while shedding some of Bloomberg's many divisions is one option — the banker pointed to Bloomberg Law, its subscription-based business for legal research, as one area ripe for being cut before a deal — the sum of the parts is much stronger than if they were sold off separately.
"I think it's more powerful as a whole," the banker said.
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