Rackspace Hires Morgan Stanley To Explore Its Options

Data hosting and cloud giant Rackspace Hosting said Thursday that it has hired Morgan Stanley to explore the possibility of partnering with another technology firm or being acquired.

In a filing with the Securities and Exchange Commission, Rackspace wrote: "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."

The company, based in San Antonio, said several suitors have expressed interest in a business relationship.

"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,’ the SEC document stated.

Hiring the investment bank to explore partnering with another technology firm is being driven by a price war in the cloud market, with Google and Amazon substantially cutting rates on their cloud offerings over the past year. Rackspace fears those competitors will undercut its business.

The SEC filing also stated that Rackspace had not made any decisions as of yet, but has set a timetable and won’t disclose more information until its board approves one.

Rackspace stock, which has taken a major hit over the past year, falling 60 percent since January 2013, surged on the news. Rackspace stock reached $31.68 per share from $28.28 a share prior to the news.

PUBLISHED MAY 15, 2014