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Rackspace Stock Rips Higher On Reports Of Amazon's Interest

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Rackspace Stock Rips Higher On Reports Of Amazon's Interest

Rackspace Technology Inc (NASDAQ: RXT) shares are generating strong buying interest following an M&A speculation.

What Happened: Amazon.com, Inc. (NASDAQ: AMZN) is looking to pick up a minority stake in cloud services company Rackspace, Reuters reported, citing sources.

There is no certainty a deal will materialize, and even if it does, it could take one to two months to negotiate it, the report said.

Why It's Important: Rackspace, majority-owned by Apollo Global Management, is a cloud computing company that provides customers with data storage and processing power on the cloud. It partners with Amazon to help customers architect, migrate and monitor Primary, Backup and Archive storage solutions on Amazon Web Services, and also competes with the cloud behemoth in certain areas.

With an ongoing partnership, a stake buy is likely to further strengthen the relationship.

Rackspace, which was taken private by Apollo in 2016 in a $4.3 billion deal, was relisted earlier this month. The IPO was priced at the lower end of the estimated price range of $21-$24, raising $704 million. The stock fell about 22% on its debut and was languishing below the IPO price.

RXT: Price Action: Rackspace shares were surging 12.7% to $18.71 at the time of publication.

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Photo by John Schnobrich on Unsplash

 

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