Apollo Agrees to Buy Rackspace in $4.3 Billion Deal

Rackspace, an early player in the cloud market, is being acquired by Apollo, a PE firm, at a 30% premium. Despite its early success, Rackspace struggled to compete with giants like Amazon and Microsoft due to their scale and pricing strategies. Over the years, Rackspace has shifted its focus from direct competition to managing cloud services. Going private may aid this transition. Rackspace remains a second-tier player, unable to match the scale of Amazon, Microsoft, and Google, who benefit from economies of scale. The acquisition may provide Rackspace with a better chance to adapt and grow in a private setting.

Which private equity firm acquired Rackspace, and what was the premium paid on the share price?

• Blackstone, 20%

• Apollo, 30%

• KKR, 35%

• Carlyle Group, 25%

What major event in 2013 significantly impacted Rackspace's ability to compete in the cloud market?

• Rackspace's internal restructuring

• AWS's aggressive price cuts

• Microsoft's acquisition of a major competitor

• Google's entry into cloud services

What strategic shift did Rackspace undertake to adapt to the competitive cloud market?

• Focusing on hardware sales

• Expanding into new geographic markets

• Becoming a cloud service manager

• Developing proprietary software

In the cloud hierarchy, how is Rackspace positioned compared to Amazon, Microsoft, and Google?

• As a dominant force

• As a leading competitor

• As a second-tier player

• As a niche market leader

What advantage do major cloud providers have over smaller companies like Rackspace?

• Better customer service

• Lower infrastructure costs due to scale

• More diverse service offerings

• Stronger brand recognition