Rackspace to be acquired by private equity for $4.3 billion

Todd Short

Rackspace Hosting Inc. will soon be going private. Photo: Carlos Javier Sanchez | SABJ

via Tony Quesada, San Antonio Business Journal

Rackspace Hosting Inc., the San Antonio-based cloud computing services company, has agreed to be acquired for $4.3 billion by funds affiliated with private equity company Apollo Global Management LLC, the company announced Friday morning.

The deal, which will result in Rackspace (NYSE: RAX) becoming a privately held company, calls for a share price of $32 and includes the assumption of $43 million of net cash, according to a news release. In connection with the transaction, funds managed by Searchlight Capital Partners LP will make a strategic equity investment in Rackspace.

The deal is expected to close in the fourth quarter and marks the second San Antonio-based public company this week to announce that it will be bought. CST Brands Inc. (NYSE: CST) will be acquired by Canada-based Alimentation Couche-Tard for $4.4 billion.

The $32 share price represents a premium of 38 percent over Rackspace’s unaffected closing stock price on Aug. 3, which is considered to be the last trading day prior to news reports speculating about a potential transaction.

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