Rackspace, an age-old company that provides a spectrum of cloud services, announced today that it is going private in a deal worth $4.3 billion. The company is being acquired by “affiliates of certain funds” under global investment manager Apollo Global Management.
According to a report, shareholders will be offered $32 a share in cash. The company’s stock had started soaring recently after rumours of its acquisition started taking air. The numbers offered by the company will equate to a 38 percent premium on Rackspace’s closing stock price on the day before the confirmation of the acquisition. Additionally, this price is actually 6 percent higher than stock’s closing price on Thursday.
The company has been declining in terms of value, steadily over the past few years. It achieved its peak stock price of $80 in 2013, after which it was just a turn for the worse. In fact, the beginning of this year, the stock price of Rackspace was a shocking $18.
The deal has already gotten the thumbs up from the board of Rackspace. Shareholders seem to be a bit more persistent, but the company hopes for a smooth deal eventually.
“This transaction is the result of diligent analysis and thoughtful strategic deliberations by our board over many months,” said Graham Weston,
said Graham Weston, cofounder and chairman of the board of Rackspace, in a news release.
“Our board, with the assistance of independent advisors, determined that this transaction, upon closing, will deliver immediate, significant and certain cash value to our stockholders. We are also excited that this transaction will provide Rackspace with more flexibility to manage the business for long-term growth and enhance our product offerings. We are confident that as a private company, Rackspace will be best positioned to capitalize on our early leadership of the fast-growing managed cloud services industry.”
The company was founded in 1998 and has been active in the cloud space ever since. It also took part in trading on the New York Stock Exchange (NYSE) since 2008. Today’s acquisition turns the company private again.