It’s Official: Rackspace Goes Private, Hopes to Rekindle ‘Entrepreneurial Spirit’

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Rackspace officially became a private company again Thursday morning after filing the final paperwork to close its deal with Apollo Global Management. Rackspace shareholders approved the deal on Wednesday.

The shares were purchased by a variety of funds, most of which are under the general umbrella of Apollo, and are identified as “affiliates of funds affiliated with Apollo” in the announcement. Searchlight Capital Partners also acquired a stake in Rackpsace as part of the deal, which pays $32 per share, as expected.

“Apollo strongly supports our strategy to grow Rackspace and expand the early leadership we’ve achieved in the fast-growing managed cloud industry,” Rackspace CEO Taylor Rhodes wrote in a blog post. “It embraces our unique workplace culture and our emphasis on providing customers with expertise and Fanatical Support for the world’s leading clouds, including various private clouds, dedicated servers, and public clouds powered by AWS, Microsoft Azure and OpenStack. Apollo is supportive of our management team continuing to lead the company.”

READ MORE: Rackspace Boosts International Team, Opens Munich Office

Rhodes also says the move is a rare opportunity for the company to recapture an entrepreneurial spirit, suggesting that whatever Rackspace has planned includes new elements, and risk. Companies previously acquired by Apollo include McGraw Hill Education, which transitioned from publishing materials in textbooks to publishing online, and Sirius Satellite Radio (now Sirius XM), and Rhodes credits their recent successes to investment in long-term strategies.

“We now face an opportunity afforded to very few companies: to rekindle the entrepreneurial spirit of our early years as a startup — but this time as one that employs thousands of specialized engineers with the scale and depth of expertise to serve the world’s most complex enterprise customers,” Rhodes said.

SEE ALSO: Rackspace Going Public Again a ‘Likely’ Scenario, Co-Founder Says

Flexible resource allocation and multi-cloud managed service enhancement are the main benefits of going private, Rackspace says.

Rackspace CTO John Engates told the WHIR after the deal was announced that Apollo approves of its focus on private cloud, managed AWS and Azure, and security, and sees a huge opportunity moving business workloads to the cloud. The company will continue to be based in San Antonio, with no changes to its employees or customers.

Rackspace launched a brand awareness campaign in October with the tagline “Rackspace. Your clouds. Our expertise.”

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