Cloud management provider Rackspace has decided that it will pay its shareholders more than $4.3 billion and go private.
Apollo Global Management says it will pay $32 per share to buy out stakeholders and run Rackspace as a private company. The deal is not that bad, the stock closed at $30.19 per share.
The deal is expected to be completed in the fourth quarter of this year. Actually this was all predicted a few weeks ago and this had caused Rackspace’s stock price to go up so the closing prices is little to do with the actual value of the company.
Rackspace wants to see off larger competition in the cloud management space and had been mulling over a buyout since 2014.
Rackspace CEO Taylor Rhodes said that the outfit had been presented with a significant opportunity today as mainstream companies move their computing out of corporate data centers and into multi-cloud models. Apollo and its partners take a patient, value-oriented approach to their funds’ investments, and value Rackspace’s strategy and unique culture.”
The dark satanic rumour mill has manufactured a hell on earth yarn claiming that the cloudy hosting provider Rackspace is going to be acquired.
The Wall Street Journal first reported Thursday that a deal with a private equity firm was imminent. Friday, a Reuters story said Apollo Global Management was working on a deal with the San Antonio-based company that could be worth more than $3.5 billion. Needless to say it has not happened yet.
The outfit has had a few problems expanding and had been looking to bring in private equity, regroup or restructure. There have been rumours for ages that they were ripe for the picking with a telecom provider thinking of buying them at one point.
But it seems that the company, despite having good offerings, is having a job saying anything relevant .
In May 2014, Rackspace informed the Securities and Exchange Commission that it had hired Morgan Stanley to formally explore a merger or acquisition. That September, Bloomberg News reported CenturyLink was looking to buy the company.
Speculation about potential suitors fizzled after Rackspace removed itself from the market and was unhappy with the offers it had received.