Rackspace is said to be nearing a deal to be acquired by a private equity investor, some two years after first announcing that it was looking for a buyer.
The Wall Street Journal cited sources close to the company as saying that a deal is likely to be concluded soon, and could be valued as high as $4bn.
Rackspace put itself officially on the market in 2014, although the company said later that it had ended the search for a buyer after no suitable offers had come forward.
This seems to have changed, although there is no word on the buyer just yet. However, one likely candidate is Blue Harbour LP, which revealed in 2014 that it had a 6.4 per cent stake in the firm, making it the largest shareholder.
Rackspace has been a well-respected name in the cloud market for several years, but has seen its original hosting offerings undercut by the rise of Amazon Web Services (AWS) and Microsoft’s Azure platform.
As a result the firm is now more focused on providing migration and management support to firms moving to the cloud via its Fanatical Support services. Rackspace has also put deals in place with AWS and Microsoft to offer these services.
Given the huge shift to the cloud by many long-standing organisations, and the fact that most new and up-and-coming firms are ‘born in the cloud’, Rackspace’s position in the market still makes it an attractive proposition, as private equity interest attests.
However, the deal is still unlikely to see shares in the company reach their $80 high of 2013, even after news of the potential buyout sent them soaring from around $25 to as high as $34.
V3 contacted Rackspace for comment on the reports but had received no reply at the time of publication.
Rackspace joins Hewlett Packard Enterprise as another company rumoured to be under consideration by a private equity firm, after reports surfaced earlier this week that it may go private in the near future.
Dell is the most notable tech firm to have embarked on this path, wishing to rid itself of the pressures that come with much-scrutinised quarterly results and shareholder demands in order to reposition itself for the years ahead.
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