Rackspace to Go Private in $4.3 Billion Deal
August 26 2016 - 10:20AM
Dow Jones News
Cloud-computing provider Rackspace Hosting Inc. is being taken
private by private-equity firm Apollo Global Management LLC for
$4.3 billion.
The deal's per-share price of $32 represents a 38% premium over
the company's stock price before The Wall Street Journal reported
details of a potential transaction on Aug. 4. Rackspace' s stock
rose 4.4% to $31.51 in morning trading in New York.
Rackspace provides cloud services to customers, allowing them to
use remote servers for data storage and computing power. The
company has shifted its business model in recent years from
primarily running its own cloud-based serves in its 11 data centers
to also helping to manage services from larger technology
companies, such as Amazon.com Inc. and Microsoft Corp.
Rackspace said going private provides the company with more
flexibility to take on shifts in customer demand.
"We are presented with a significant opportunity today as
mainstream companies move their computing out of corporate data
centers and into multicloud models," Chief Executive Taylor Rhodes
said.
The deal is expected to close in the fourth quarter and is
subject to antitrust-waiting periods in the U.S., EU and Israel;
stockholder approval; and other closing conditions. The deal's
value of $4.3 billion includes the assumption of $43 million in
cash and the acquisition of performance-related equity awards.
As of December, Rackspace had 6,189 employees and annual revenue
of $2 billion.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
August 26, 2016 10:05 ET (14:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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