Microsoft’s cloud-based business will be sold to the private equity firm Blackstone, sources close to the matter told CNBC on Monday.
The sale is valued at about $20.5 billion.
The deal was first reported by The Wall Street Journal on Monday night.
The $20-billion deal represents a significant win for Microsoft, which was able to secure $50 billion in cash and stock from Microsoft in an effort to cash in on the cloud computing market.
The company had previously struggled to secure cash from the cloud business.
Microsoft has long maintained that it was the right choice for cloud computing, as it could bring cost-cutting efficiencies and allow it to focus on other areas, like video and music streaming.
Blackstone has previously invested in several startups that are currently trading on the Nasdaq Stock Market, including Facebook, Airbnb, Uber and Netflix.
Blacksmith was founded in 2010 and has about $8 billion in annual revenue.
Microsoft also has a $2 billion acquisition agreement with Blackstone that could be renewed for another five years.