Apollo Global Management is scooping up the cloud provider for $4.3 billion.

Mitch Wagner, Executive Editor, Light Reading

August 26, 2016

2 Min Read
Rackspace Sale Speeds Pivot to Cloud Support

Rackspace is going private in a $4.3 billion deal with a group of investors led by Apollo Global Management. The transition will give the company breathing room to focus on a long-term strategy providing services to help enterprises launch IT infrastructures on multiple clouds and managed services.

By being acquired, Rackspace is looking to "seize the opportunity" that has emerged with its position as "the early leader in the fast-growing managed cloud services industry," CEO Taylor Rhodes said in a blog post Friday.

The deal will require approval of stockholders and regulators and will close quarter four. Rackspace stockholders will get $32 per share for a premium of about 38% over Rackspace's closing price of $23.16 on Aug. 3, the last trading day before news reports hit that speculated about the potential transaction, Rhodes said. (See Is Cloud Provider Rackspace Going Private?)

For further financial details, see Rackspace's announcement: Rackspace Going Private for $4.3B.

Rackspace's existing management team has been asked to stay on, including Rhodes.

Apollo will give Rackspace time to transition from its history running customer cloud applications in its own data centers to its more recent business model, where it provides professional services to enterprises making the transition to cloud.

Want to know more about the cloud? Visit Light Reading Enterprise Cloud.

For example, Rodan + Fields, a skincare products company, relies on the cloud -- with Rackspace's help -- to support its direct sales business model. (See Cloud Lifts Rodan + Fields Towards $1B Revenue.)

Rackspace still maintains its own cloud services; it spearheaded development of OpenStack and is a leading implementer of that technology today.

Rackspace was an early mover as a cloud provider, but it has been outpaced by other contenders, particularly Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT), a current partner of Rackspace.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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