Rackspace soars 19% after report says Amazon is eyeing a minority stake in cloud services provider
- Rackspace soared 19% on Monday after a report from Reuters said that Amazon is eyeing a minority stake in the cloud services provider.
- A deal between the two could take one to two months to negotiate, according to the report.
- Rackspace helps companies migrate data to the cloud and transition to cloud services like Amazon Web Services and Microsoft's Azure.
- Reuters added that sources said there is no guarantee a deal between Amazon and Rackspace will occur.
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Rackspace soared as much as 19% on Monday after a report from Reuters said that Amazon has expressed interest in acquiring a minority stake in the cloud services provider.
Rackspace went public on August 5 after being acquired in a leveraged buyout by Apollo Global Management in 2016. Apollo remains a majority owner of Rackspace since the company went public earlier this month.
Reuters, citing an anonymous source, reported that a deal between the two companies could require one to two months of negotiations, and added that a deal is not guaranteed.
Rackspace helps companies migrate their data to cloud platforms like Amazon Web Services and Microsoft's Azure. An investment by Amazon would strengthen ties between the two companies, who already work together on the cloud.
Amazon's AWS cloud unit continues to see a surge in demand, having hit $10.81 billion in revenue in the second quarter, representing year-over-year growth of 29%. The continued growth in AWS could be reason for why Amazon wants to strengthen its ties with Rackspace.
Rackspace hit an intraday high of $19.79 on Monday.
