Rackspace Grows Its Cloud Infrastructure Business by Acquiring Datapipe

The acquisition, largest in Rackspace’s 19-year history, brings new capabilities and will enable the company to better serve customers of all kinds--globally and at scale, the company said.


Cloud infrastructure provider Rackspace revealed Sept. 11 that it will acquire Datapipe, a provider of managed services across public and private clouds, managed hosting and colocation. Terms of the acquisition were not released.

The acquisition, largest in Rackspace’s 19-year history, brings important new capabilities and will enable the company to better serve customers of all kinds--globally and at scale, the company said.

Rackspace offers both public and private OpenStack cloud services and also provides managed support offerings for other cloud providers, including Amazon Web Services (AWS).

"Our customers are looking for help as they spread their applications across public and private clouds, managed hosting, and colocation, depending on the blend of performance, agility, control, security, and cost-efficiency they're seeking," CEO Joe Eazor said. "With the acquisition of Datapipe, we're very pleased to expand the multi-cloud managed services we provide our customers, while also opening doors to new opportunities across the globe."

Multiple Clouds a Growing Trend

A growing number of enterprises are using multiple clouds in their daily business, including for test and development, human resources, sales and marketing and other tasks. CTO John Engates said his customers have been asking Rackspace to expand its abilities in managing multiple clouds at scale; thus the acquisition of Datapipe is designed to meet this growing demand.

Among the new capabilities that Datapipe brings to Rackspace are:

  • experience serving high-profile public sector customers, including the U.S. Departments of Defense, Energy and Treasury, as well as the U.K. Cabinet Office, Ministry of Justice and Department of Transport;
  • professional services, software and tooling that will help better serve enterprise customers;
  • data centers and offices in key markets where Rackspace today has little or no presence, including the West Coast of the U.S., Brazil, mainland China and Russia;
  • traditional colocation services across four continents, to reduce cost and risk for customers moving applications out of their corporate data centers; and
  • managed services on the Alibaba Cloud (the largest in China).

Rackspace also brings new capabilities to Datapipe customers, including:

  • deep experience in Microsoft, VMware, and OpenStack private clouds, including new service offerings for Azure Stack and VMware Cloud on AWS;
  • managed Google Cloud Platform; and
  • managed services for enterprise applications, including those in the Oracle and SAP ecosystems, and those used in digital marketing and ecommerce.

Rackspace has followed the example of companies such as Dell, which went private in 2013 in order to simply operations, become more agile as a company and make quicker corporate business decisions.

Going Private Enables Rackspace to Move Quicker

Rackspace announced in August 2016 that it was going private in a $4.3 billion deal led by Apollo Global Management. "I think it simplifies our lives being a private company," Engates said at the time. 

As a public company, Rackspace spent a lot of time explaining to investors why what the company was doing was important, Engates said. Being a private company has helped Rackspace move faster and be more effective, he said.

Founded in 2000, Datapipe is a pioneer in managed public cloud services. It is a growing and profitable business, based in Jersey City, N.J., with 825 employees and 29 data centers in nine countries. Datapipe serves the complex needs of many large enterprises, including Johnson & Johnson, McDonald's and Rubbermaid.

"We are very proud of the business we have built and the innovations and successful customer outcomes we have been recognized for, and the future of Datapipe will be even brighter in combination with Rackspace," said Robb Allen, founder and CEO of Datapipe.

'Customers Need Guidance on Clouds'

"Customers need guidance using public cloud infrastructure from Alibaba Cloud, Amazon Web Services, Google Cloud Platform, and Microsoft Azure. They also need help navigating the use of private clouds, managed hosting and colocation solutions, often in combination, as they move critical applications out of their corporate data centers."

Rackspace and Datapipe are remarkably similar. Both companies have been positioned as leaders in the Gartner Magic Quadrant assessments of providers of managed cloud services and in industry rankings by Forrester and other leading analyst firms. Both companies are known for their technical expertise and managed services across multiple clouds, customer service, profitable growth, and engaged workplace cultures.

Both companies are privately held, with Rackspace owned by affiliates of certain funds of Apollo Global Management, LLC and certain co-investors. The majority owner of Datapipe, Abry Partners, will receive equity in Rackspace. Brian St. Jean, Partner at Abry, described this transaction as "a measure of our confidence in the bright future of Rackspace when combined with Datapipe."

No additional terms or details of the transaction will be publicly disclosed. Rackspace said the acquisition is expected to close in Q4 2017.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...