In Going Private, Rackspace Will Do Things Not Possible as Public Company, CTO Says
Apollo sees a huge opportunity in the investments Rackspace has already made in cloud services, and an even bigger opportunity in those that it could make by going private.
Brought to you by The WHIR
If you look at the core industries in which New York private equity firm Apollo Global Management invests in, you’ll notice one area missing from that list: technology. That could change, however, as Apollo announced on Friday that it has acquired San Antonio-based Rackspace for $4.3 billion, or around $32 per share in cash.
So why would a firm who has invested in everything from a cruise ship line to Twinkies want to buy Rackspace?
According to Rackspace CTO John Engates, Apollo sees a huge opportunity in the investments Rackspace has already made in cloud services, and an even bigger opportunity in those that it could make by going private.
“They think if we continue down this path in private cloud, managed cloud for Amazon Web Services, and Microsoft Azure, and some of the work we’ve been doing around security; they think those are the right moves,” Engates tells The WHIR in an interview on Friday. “There’s a huge opportunity in the transition from on-premises data centers to the cloud. There are lots and lots of workloads still sitting in private data centers or corporate data centers that need to get to the cloud in some form or fashion so I think that’s what they’re also excited about and want to invest in.”
Earlier this month rumors resurfaced that Rackspace was exploring private equity. The company, which traded on the New York Stock Exchange under the ticker symbol RAX since going public in 2008, had explored the option before, two years ago with Morgan Stanley.
That never materialized, and the company shifted gears, focusing on adding managed services – including support, which it dubs Fanatical Support – for some of the fastest growing public clouds, including Amazon Web Services (AWS) and Microsoft Azure.