Rackspace Acquires Competitor Datapipe

Sep 11, 2017

**Updated throughout**  Rackspace has acquired competitor Datapipe, the largest in the company's history for an undisclosed amount. The announcement came on the company blog Monday in a post from CEO Joe Eazor.


According to the blog post, New Jersey-based Datapipe has 825 employees across 11 offices on three continents. Datapipe is another managed cloud provider but gives Rackspace clients like the Department of defense, energy and treasury as well as data centers in untapped markets like Brazil and Russia. 

Rackspace Chief Technology Officer John Engates says until now Rackspace hasn't had a role in China, "but Datapipe does, and they are partnered with Alibaba Cloud, which is the largest cloud in China. So this gives us the ability to serve customers not just in the U.S., not just in Europe, not just in Asia, but in all those locations."

The deal will make Rackspace the leading provider in many of its business areas, including managed public cloud - on AWS, Google Cloud and Microsoft's Azure platforms - which the company has been focusing on for several years.  Datapipe has been working in that managed public cloud world for twice as long.

Rackspace went private last fall after being acquired by Apollo Global Management for $4.3 billion. Since then Rackspace has reduced staffing by seven percent, as well as had turnover in its CEO and CFO chairs. Today's acquisition along with the recent purchase of TriCore is proof to Engates that rather than parting out the company, Apollo is following through on its promise to grow and expand. 

"They saw what a lot of other investors didn't see in Rackspace. They made a big bet on the company with the intent to invest in it and amplify its capabilities," he says. 

Engates expects some positions to move to San Antonio, but says it is hard to know before the deal closes in the fourth quarter, a required regulatory sign off from the Feds, and an integration has been fully explored. He says the company acquisition is complimentary to Rackspace, and could see many people staying put.