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Rackspace To Acquire Rival Datapipe Creating Managed Cloud Services Giant

Once rumored as an acquisition target by a larger cloud provider, now it's Rackspace that's getting bigger. The company today said it is making its largest acquisition to date with its agreement to buy rival Datapipe, a combination that will bring together two leading providers of managed hosting and cloud services.

While terms weren't disclosed, the deal is expected to close by the end of the year, pending financing and regulatory approval. Bringing together the two companies will create a managed hosting and cloud service provider with a total of 40 datacenters throughout the world, making it the largest, according to Rackspace CEO Joe Eazor.

"It will have a big impact on our ability to deliver the multi-cloud services that today's customers are demanding," Eazor said, in a blog post. "They want us to give them expert, unbiased advice, and manage their applications on whichever clouds will best meet their unique needs. They want us to serve them at scale, from data centers and offices across the globe. And they want the world's best customer experience, across digital tools and results-obsessed customer service. Our mission is to meet those needs -- today and as they evolve."

Rackspace, based in San Antonio, has 11 datacenters worldwide and Jersey City, N.J.-based Datapipe runs 29. Both are privately held and offer managed public and multi-cloud services that collectively include the Alibaba Cloud, Amazon Web Services, Google Cloud Platform and Microsoft Azure.

The companies also have distinct services. Datapipe offers Alibaba Cloud integration, giving Rackspace a foothold in China. Datapipe customers will be able to benefit from Rackspace's Google-based services. Rackspace, which was a key creator of OpenStack before contributing it to the open source community, offers managed OpenStack services. Rackspace also offers VMware-hosted services and though its Microsoft partnership managed Exchange, SharePoint and Windows Server hosting. It also provides Office 365 and Google at Work services. Rackspace also now offers managed Oracle and SAP services.

Datapipe will boost the Rackspace portfolio in several ways. It has a strong public sector business with such customers as the U.S. Department of Defense, Dept. of Energy and the Treasury department, and has FedRAMP and FISMA certifications. It services agencies outside the U.S. including the U.K Cabinet Office and the Ministry of Justice and the Department of Transport. Datapipe gives Rackspace an extended presence in many places it lacked or was limited in including the U.S. west coast, Brazil, China and Russia. Datapipe also brings added managed public cloud migration services, colocation services covering four continents and experience bringing cloud services to midsize organizations as well as large enterprises.

The agreement is indeed a reversal of fortunes for Rackspace, which had struggled to grow a few years ago, and had put itself up for sale in 2014. After failing to forge an acceptable deal, Rackspace decided to go it alone, and added public cloud services from AWS, Google and Microsoft to its managed services portfolio. The company also went private last year after Apollo Global Management and its investors acquired it for $4.3 billion. Eazor came in as Rackspace's CEO earlier this year after leading Earthlink, which was acquired late last year by Windstream.

Posted by Jeffrey Schwartz on 09/11/2017 at 3:03 PM


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