Tags: Rackspace | cloud | Strategic | Shares

Rackspace Ends Strategic Review, Names New CEO; Shares Sink

Tuesday, 16 September 2014 05:13 PM

Rackspace Hosting Inc., a provider of cloud-computing services, ended a strategic review that was seen as a prelude to a possible acquisition. The company's shares tumbled in aftermarket trading Tuesday.

The San Antonio, Texas-based company, which had hired Morgan Stanley to seek strategic options, said in a statement it now plans to remain independent and promoted Taylor Rhodes to chief executive officer.

Rackspace conducted the review after the company said it had been approached by multiple groups interested in a partnership or acquisition. Like Amazon.com Inc. and Google Inc., Rackspace uses servers and software to help companies offload portions of their computing and storage work. Moving to cloud services has been a popular trend among companies looking to save on the cost of buying equipment and operating their own data centers.

Co-founder and chairman, Graham Weston, was called in to take over as Rackspace’s interim CEO in February after the retirement of Lanham Napier, who was CEO for eight years. When Napier left, Rackspace hired a search firm to find a long-term replacement, though the company gave no specific timeline for the move.

“We ran a thorough process under the direction of our board of directors, independent advisers, and a Strategic Transaction Committee of the Board,” Weston said in the statement. “In this process we talked to a diverse group of interested parties and entertained different proposals. None of these proposals were deemed to have as much value as the expected value of our standalone plan.”

Shortly after 5 p.m. in New York, Rackspace shares were down 17 percent at $32.68, after gaining less than 1 percent to $39.34 at the close.

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Rackspace Hosting Inc., a provider of cloud-computing services, ended a strategic review that was seen as a prelude to a possible acquisition. The company's shares tumbled in aftermarket trading Tuesday.
Rackspace, cloud, Strategic, Shares
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2014-13-16
Tuesday, 16 September 2014 05:13 PM
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