August 5, 2016

Reports: Rackspace to be sold to private equity firm

Deal said to be in the pipeline for 2 years, with reports saying a final decision on the matter will be taken soon.

Rackspace Hosting, the pioneer for cloud services, is said to be on the verge of agreeing a sale to a private-equity firm. The latest development comes two years after the company said it would be exploring potential deals in the midst of a highly competitive and fast-growing market.

Market reports indicate that the San Antonio-based company is in advanced talks with a number of private-equity firms, and that a deal will soon be reached, perhaps even as early as this week.

Rackspace provides hosting and cloud services, in an industry that has exploded in recent years. The company has been transitioning its business model in the past few years, amid cut-throat competition from AWS, Microsoft Azure, etc. and has become more of a services provider offering bundled computing and support.

Rackspace had a market value of $3 billion on Thursday before news of the potential deal broke, with the acquisition price expected to be more than that figure.

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