Saturday, August 27, 2016

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.

http://www.rackspace.com

  • 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.

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