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Rumor: Rackspace Hosting, Inc. Could Get $55/Share Bid

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Rackspace Hosting, Inc. (NYSE: RAX) may fetch a bid of $55 a share from landline phone company CenturyLink, Inc. (NYSE: CTL), according to a British-based blogger and freelance journalist.

The writer, Ben Harrington, said CenturyLink is banging on the doors of U.S. banks hoping to line up $6 billion in financing for the deal. Harrington cited what he described as "excellent sources."

The deal has been rumored since at least July and was reported most recently last week by Bloomberg, which didn't cite an offer price.

Rackspace, a San Antonio-based cloud services company with a market capitalization of $5.6 billion, is facing stiff competition from the likes of, Inc. (NASDAQ: AMZN), Google Inc (NASDAQ: GOOGL) and many others.

In mid-May, the company said it received buyout offers and hired Morgan Stanley to evaluate the bids and to “explore...other alternatives."

Harrington also sought to revive earlier rumors that Rackspace could get a bid from Hewlett-Packard Company (NYSE: HPQ), which last week acquired Eucalyptus, a private startup that provides software for building cloud technology.

Rackspace closed Monday up 1.2 percent at $39 a share. Its stock has gained about 25 percent in value during the past month.

Posted-In: Rackspace HostingNews Rumors


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