Boston, MA 09/09/2014 (wallstreetpr) – Is open cloud company with a diverse portfolio, Rackspace Hosting, Inc. (NYSE:RAX) ready for sale? The race to grab the growing market in cloud computing has obviously been driving even several big companies such as Microsoft Corporation (NASDAQ:MSFT) or Google Inc (NASDAQ:GOOGL) to scout for acquisitions.
While Rackspace Hosting has not indicated its intention of selling itself, companies like CenturyLink, Inc. (NYSE:CTL), which is engaged in integrated communications, seek to expand its business in cloud computing and is ready to join the battle with big companies to scout for potential acquisition.
CenturyLink Shows Interest In Rackspace
The landline phones service provider has evinced interest in Rackspace Hosting, Inc. (NYSE:RAX), Bloomberg reported quoting people familiar with the events. CenturyLink, Inc. (NYSE:CTL) held discussions with Rackspace last month on the possibility of acquisition. However, Rackspace has reportedly told CenturyLink that they were conducting an internal analysis of its strategic review.
Rackspace, which has a market capitalization of $5.69 billion, seems to have not committed itself to any acquisition offer. Both the companies have also refrained from commenting on the discussions they had on the acquisition matter.
CenturyLink believes that a deal with Rackspace would allow it to offer cloud services also along with data and phone communication packages, which would help the company to compete against the big companies in the space.
Strategic Review
Earlier this year, Rackspace Hosting, Inc. (NYSE:RAX) disclosed that it has been contacted by many interested groups either for partnership or acquisition. Therefore, it has hired Morgan Stanley (NYSE:MS) in May to suggest strategic options and also explore the available ways and means to extend the business.
However, the company has been in the news for take over speculation at least in the last few years.
Will CenturyLink Succeed?
While one of the people indicated the difficulties in reaching a deal, DA Davidson & Co. analyst Donna Jaegers believes that the chances are less than 50% in the deal coming through unless Rackspace Hosting, Inc. (NYSE:RAX) would settle for stock payment or strike a joint venture deal.
