Rackspace Hosting eyed by another potential suitor, report says

Jun 25, 2014
Austin Business Journal

Rackspace Hosting Inc. is still generating buzz in the technology industry about a potential takeover

The San Antonio-based managed hosting and cloud computing company announced earlier this year that it was looking at “strategic proposals” and had retained the services of investment banker Morgan Stanley to evaluate the proposals and explore any other alternatives

The latest company to be cited as a potential buyer is Monroe, La.-based CenturyLink, a multinational communications company that provides services to residential, business, governmental and wholesale customers

Rackspace has a strong Austin presence as the area's 47th-largest employer in the region, according to the Austin Business Journal Book of Lists. It has 482 local employees and is a finalist for ABJ's 2014 Best Places to Work. The awards will be handed out Thursday

Analyst David Phipps tells the Motley Fool investment website that a merger with Rackspace would double CenturyLink’s service revenue and increase overall revenue growth for both companies

CenturyLink has already made two acquisitions in this area in recent years including its $2.5 billion purchase of Savvis in 2011 and its purchase of Tier3 last year for an undisclosed sum

Other companies have been touted as potential suitors for Rackspace include industry giants such as IBM, Hewlett-Packard, Cisco Systems, Google Inc. and Amazon.com. When Rackspace said in May that it was seeking a strategic partner, the company's shares soared

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