Rackspace Entertains Buyout Offers

Rackspace Hosting may be sold.
The San Antonio-based company hired Morgan Stanley to evaluate potential partnerships and acquisitions.
“In recent months, Rackspace has been approached by multiple parties who have expressed interest in exploring a strategic relationship with Rackspace, ranging from partnership to acquisition,” according to a statement filed with the Securities and Exchange Commission last week.
“Our board decided to hire Morgan Stanley to evaluate the inbound strategic proposals and to explore other alternatives which could advance Rackspace’s long-term strategy,” Rackspace wrote. “No decision has been made and there can be no assurance that the Board’s review process will result in any partnership or transaction being entered into or consummated.”
Rackspace, which provides web hosting and open cloud services, reported it did not intend to comment on the situation until its board approves a specific partnership or transaction. The company has faced increasing competition from giants Google and Amazon, which provide cloud hosting services.
In February, Lanham Napier, 43, retired as Rackspace’s chief executive officer. He had led the company since 2000 from a small startup to a large publicly traded company with more than 5,000 employees worldwide and more than $1.5 billion in revenue.
A year earlier, Lew Moorman, Rackspace’s president, left the company because of health issues with a family member.
Since February, Graham Weston, Rackspace’s chairman and co-founder, has served as its CEO.
Rackspace, founded in 1998, is the largest technology company in San Antonio with more than 3,000 employees occupying the old Windsor Park Mall in Northeast San Antonio. It also has an office in Austin and has international offices in London and Hong Kong.
Rackspace’s stock, traded under the symbol RAX on the New York Stock Exchange, soared on the news of the possible sale last week. Rackspace’s stock closed at $36.12 on Friday, up nearly 18 percent. The company’s stock traded as low as $26 and as high as $54 in the last 52 weeks. The stock traded as high as $81 per share in January of 2013, according to Forbes.