Rackspace is now a private company. It was acquired by affiliates of funds managed by affiliates of Apollo for $32.00 per share in cash. In connection with the transaction, funds managed by Searchlight Capital Partners, L.P. also made a strategic equity investment in the acquired company. Rackspace’s common stock will no longer be listed for trading on the New York Stock Exchange.
“We are excited to begin this new chapter for Rackspace as a private company,” said Taylor Rhodes, president and CEO of Rackspace. “I would like to thank our Rackers around the world who, throughout this process, have remained focused on serving our customers. Every day they deliver expertise and Fanatical Support for the world’s leading clouds. We look forward to working with Apollo as we manage Rackspace for long-term growth and expand our early leadership of the managed cloud market. We believe that the best years for Rackspace are yet to come.”
Rackspace to go Private in $4.3 Billion Buyout
Rackspace (NYSE: RAX) announced plans to go private in a buyout led by funds managed by affiliates of Apollo Global Management.
Under the deal, Rackspace will be acquired for $32.00 per share in cash, representing a premium of 38% compared to Rackspace’s unaffected closing stock price on August 3, 2016, the last trading day prior to news reports speculating about a potential transaction. In connection with the transaction, funds managed by Searchlight Capital Partners will make a strategic equity investment in the acquired company. The transaction has a total value of $4.3 billion, which includes the assumption of $43 million of net cash.
Taylor Rhodes, president and CEO of Rackspace, said, “We are presented with a significant opportunity today as mainstream companies move their computing out of corporate data centers and into multi-cloud models. 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.”
Goldman, Sachs & Co. is acting as financial advisor to Rackspace and Wilson Sonsini Goodrich & Rosati, Professional Corporation is acting as its legal advisor.
- Rackspace, which was founded in 1998 in San Antonio, provides businesses with expertise and exceptional customer service for the world’s leading cloud platforms, including AWS, Microsoft, and OpenStack (the open-source cloud platform that Rackspace co-founded in 2010, along with NASA). Rackspace has been publicly traded on the New York Stock Exchange since 2008. The company reported 2015 revenue of $2.0 billion.
- Rackspace collaborated with NASA to develop OpenStack in 2010.
