Hosting company turned cloud pioneer Rackspace has agreed a takeover led by private equity firm Apollo Global in a $4.3bn deal.
The agreement follows months of speculation over the future of Rackspace, which has struggled to compete with Amazon Web Services and Microsoft Azure, in particular, despite its role in the development of the OpenStack cloud standard.
News of the deal was announced today following unanimous agreement by the Rackspace board.
Assuming that the transaction is approved, shareholders will receive a 38 per cent premium on the closing price of the company's stock at the beginning of August.
Although as rumours of a takeover deal gathered pace earlier this month, the price is just six per cent above the company's closing stock price yesterday.
Justifying the deal to customers, Rackspace president and CEO Taylor Rhodes said: "We expect that this transaction will help us better serve our customers in 120 countries, which now include more than half of the Fortune 100.
"It will allow us additional flexibility to enhance the multi-cloud services that today's customers demand, and to seize the big opportunity that we face as the world's number-one managed cloud company."
Rhodes added that the acquisition is the culmination of a strategic review conducted by the board "to maximise value for Rackspace shareholders".
The company's share price slumped by almost half during 2015 as it became clear that Rackspace was being pinched in terms of price and growth in cloud computing.
Furthermore, infrastructure-as-a-service does not offer the kind of margins as software-as-a-service or the same kind of benefits for customers looking to offload the expense and hassle of managing IT environments.
The deal, according to Rhodes, will help the company to compete against AWS and Microsoft.
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