No Parting of the Cloud for Rackspace

Grazed from WSJ. Author: Dan Gallagher.

Rackspace Hosting has little choice but to go it alone. The provider of cloud-computing services has called off its so-called strategic evaluation process that could have led to a sale of the company. While Rackspace said late Tuesday it had been approached by "multiple parties" under various scenarios, none of the offers matched the value it believes it can create with its own stand-alone plan.

More likely, none of those parties felt up to matching, let alone topping, the $5.7 billion market capitalization Rackspace was sporting. That was in large part due to a run-up in its shares after a May announcement that it was evaluating options. The stock had been around a four-year low before that, predictably drawing interest from suitors looking to bulk up their own cloud offerings…

Among those seen as potential suitors were Hewlett-Packard, HPQ +0.37% International Business Machines IBM +0.57% and CenturyLink. CTL +0.40% But all those companies would have been hard-pressed to explain such a deal to their own shareholders, who may have viewed Rackspace as a troubled underdog in a business undergoing severe price compression…

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