Rackspace bought by investment firm for $4.3bn

Speculation that the firm was up for sale has been rife since March

Rackspace has been bought for $4.3bn (£3.2bn) by investment firm Apollo in a deal which ends months of speculation about the firm's future.

The cloud firm announced this afternoon that it has entered into a definitive agreement with Apollo Global Management, an alternative investment manager. The firm will be snapped up for $32 per share in cash for a total value of $4.3bn. Upon completion, Rackspace will become a private firm.

In March, CRN cited numerous sources claiming Rackspace was preparing for a sale, with AWS and HP mooted as possible buyers. The deal is expected to close in Q4, subject to gaining certain regulatory approvals.

Rackspace's chairman Graham Weston said the deal is the result of "diligent analysis and thoughtful strategic deliberations" over many months.

"This transaction, upon closing, will deliver immediate, significant and certain cash value to our stockholders," he said. "We are also excited that this transaction will provide Rackspace with more flexibility to manage the business for long-term growth and enhance our product offerings. We are confident that as a private company, Rackspace will be best positioned to capitalise on our early leadership of the fast-growing managed cloud services industry."

Cloud market watcher and Cloud Industry Forum board member Ian Moyse said the acquisiton is "no surprise".

"With the lacklustre performance of the big cloud stock in the past 36 months, a big change was needed," he said. "To replace traditioonal business with in effect a resale model of others clouds will be harder work and smaller margins - selling a lot more to achieve the same. There is still good business in the straight datacentre world, but this will continue to be price and function pressured by the giants with far bigger pockets."