Rackspace Goes Private In £3.25bn Takeover

Rackspace is going private after private equity firm Apollo Global Management agreed a $4.3 billion (£3.26bn) deal to take control of the cloud hosting firm.

Rumours of a takeover by Apollo have persisted in the past few weeks, although it was estimated that a $3.5 billion deal (£2.65bn) could be in the works ahead of Rackspace’s ‘Solve’ customer event earlier this month.

The company announced its intent to study strategic alternatives two years ago and claims the Apollo agreement will deliver “immediate, significant and certain cash value” to its investors and give Rackspace greater ability to take advantage of a growing market for managed cloud services.

Rackspace takeover

“We are presented with a significant opportunity today as mainstream companies move their computing out of corporate data centres and into multi-cloud models,” said Rackspace CEO Taylor Rhodes.

“Apollo and its partners take a patient, value-oriented approach to their funds’ investments, and value Rackspace’s strategy and unique culture. This is an exciting transaction for Rackspace and we look forward to working closely together.”

“We are tremendously excited about the opportunity for our managed funds to acquire Rackspace,” added David Sambur, Partner at Apollo. “We have great respect for the company’s talented employees and their commitment to deliver expertise and exceptional service for the world’s leading cloud platforms.”

Rackspace works with a number of public cloud vendors, including Mivrosoft and AWS, while earlier this month it claimed to have reached one billion server hours operating in production-ready OpenStack clouds. Rackspace was a co-founder of the OpenStack cloud movement, along with NASA, and said that it has more experience building OpenStack clouds than any other company.

The deal is expected to be completed in the fourth quarter of this year.

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