Rackspace Acquired by Apollo, Staying in San Antonio

Rackspace remaining in San Antonio after acquisition.

San Antonio-based Rackspace is being acquired for $4.3 billion, or $32 a share, by Apollo Global Management and affiliate investors and being taken private in a deal that will keep the company and its management team in San Antonio, according to a joint announcement made Friday morning.

The deal is expected to close in the fourth quarter this year. Rackspace’s board of directors has unanimously approved the deal and have recommended that shareholders vote in favor of the transaction. Once the deal closes, Rackspace Co-Founder and Chairman Graham Weston and other directors will step down as the board is dissolved. Apollo and its affiliate investors, including Searchlight Capital Partners, will appoint a new board of directors which could include Weston or others currently associated with Rackspace.

People familiar with Rackspace’s legacy business and its newer enterprises, notably its deal with Amazon Web Services, say taking the company private will allow Rackspace to operate free of the quarterly reporting cycles that drive publicly-traded companies, freeing up resources to accelerate growth of its newer businesses and pursue complementary acquisitions.

“Rackspace has been a leader in our local (tech) sector,” said Mayor Ivy Taylor. “We have to be  prepared for these kinds of changes. The nature of these industries are changing so fast. I’m just pleased they’ll still have a footprint and headquarters here in San Antonio because they’ve been such an asset to our community and we look forward to that continuing.”

Click here to read the full article: Rackspace Acquired by Apollo, Staying in San Antonio The Rivard Report 8-29-2016