=Rackspace (RAX) to be acquired by Apollo Global (APO) for $32.00/share

• Rackspace (RAX) agrees to be acquired by Apollo Global (APO) for $32.00/share in cash, or approximately $4.3 bln.  (8/26/16)

   

The co announced that it has entered into a definitive agreement with affiliates of certain funds managed by affiliates of Apollo Global Management, LLC (APO) to be acquired for $32.00 per share in cash. In connection with the transaction, funds managed by Searchlight Capital Partners, L.P. will make a strategic equity investment in the acquired company. The transaction has a total value of $4.3 billion, which includes the assumption of $43 million of net cash. Upon completion of the transaction, Rackspace will become a privately held company.

• The transaction is expected to close in the fourth quarter of this year. The transaction is subject to the conclusion of the applicable antitrust waiting periods in the United States, the European Union and Israel, stockholder approval and other customary closing conditions.

Rackspace (RAX) to be taken private?

San Antonio based cloud computing giant Rackspace (RAX) saw its share price soar more than 13% Friday morning following reports that the company is discussing a possible sale to private equity firm Apollo Global Management. According to Reuters, if the deal goes through it could be a transaction valued at more than $3.5 billion. The company’s primary business involves leasing server space to organizations. Last year it realized gross revenues of $1.3 billion and a net profit of $122 million. Rackspace is expected to announce its second-quarter earnings on Monday.

** Thu Shares of data center hosting outfit Rackspace Hosting (RAX) were halted just before the closing bell, as headlines came across the Dow Jones wire that the company is in “advanced talks” with private equity to be taken private, citing multiple unnamed sources.
The shares had risen $2.93, or almost 13%, to $26.09, before the halt.

RAX one week later

An internationally diversified investment group, Apollo Global has carried out a series of high-profiled acquisitions this year that have resulted in the privatization of several once-public companies. Earlier this year, the company bought security firm ADT Corp for $6.9 billion, making it the largest leveraged buyout for 2016. Most recently, Apollo acquired Diamond Resorts International (DRII) in June for $2.2 billion.

=Rackspace (RAX) reported earnings on Mon 9 May 2016 (a/h)

Rackspace beats by $0.12, reports revs in-line; guides Q2 revs in-line; guides FY16 revs in-line :

• Reports Q1 (Mar) earnings of $0.34 per share, excluding non-recurring items, $0.12 better than the Capital IQ Consensus of $0.22; revenues rose 7.9% year/year to $518.1 mln vs the $519 mln Capital IQ Consensus.
• Co issues in-line guidance for Q2, sees Q2 revs of $519-524 mln vs. $523.72 mln Capital IQ Consensus Estimate.
• Co issues in-line guidance for FY16, sees FY16 revs of $2.08-2.16 bln vs. $2.12 bln Capital IQ Consensus Estimate.

RAX — is it a buy?

• #58

Rackspace (RAX) reported earnings Mon 9 Nov 2015 (after close)

** charts before earnings **

'

** charts after earnings **

Rackspace beats by $0.06, beats on revs; guides Q4:

• Reports Q3 (Sep) earnings of $0.26 per share, $0.06 better than the Capital IQ Consensus of $0.20; revenues rose 10.7% year/year to $508.9 mln vs the $503.06 mln Capital IQ Consensus; adj. EBITDA margin 34.9%.
• For Q4, Rackspace expects revenue to grow between 2-3% quarter-over-quarter, on a constant currency basis (as reported consensus including FX +1.7% QoQ), and expects Adjusted EBITDA margins to be between 33-34%.