Rackspace Hosting Nears Sale to Private-Equity Firm
August 04 2016 - 5:10PM
Dow Jones News
Rackspace Hosting Inc. is nearing a sale to a private-equity
firm, two years after the cloud-computing company said it would
explore a deal amid heightened competition in the fast-growing
market.
The San Antonio-based company is in advanced talks with one or
more private-equity firms, and a deal could be reached as soon as
this week, according to people familiar with the matter.
Rackspace had a market value of $3 billion on Thursday afternoon
before The Wall Street Journal reported on the possible sale,
meaning that with a typical takeover premium, the company could be
valued at as much as $4 billion.
Rackspace is a pioneer in the market for cloud services, which
allow users to tap remote servers for storage and expanded
computing power and have exploded amid the surge in mobile
usage.
The company has transitioned its business model in recent years,
amid stiff competition from web giants such as Amazon.com Inc. and
Microsoft Corp. and is now more of a services provider offering
bundled computing and support.
In 2014, the company said it had hired bankers to help evaluate
expressions of interest. Later that year, Blue Harbour Group LP
disclosed a sizable stake in Rackspace. Today, the activist
investor is among the company's largest shareholders, with a stake
of more than 9%.
--Matt Jarzemsky contributed to this article.
Write to David Benoit at david.benoit@wsj.com and Dana Mattioli
at dana.mattioli@wsj.com
(END) Dow Jones Newswires
August 04, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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