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Rackspace acquisition: Cloud services firm to buy Datapipe

Rackspace's pending acquisition of Datapipe will let the combined entity manage a range of public and private cloud options, an increasingly important capability for enterprises.

Rackspace has inked an agreement to acquire Datapipe, a move that executives from both companies said will give the combined entity an edge in multicloud management services.

The latest Rackspace acquisition would be the largest in the company's history, according to Rackspace. In recent merger and acquisition activity, the San Antonio company in June 2017 closed the purchase of TriCore Solutions, a company that focuses on managing ERP offerings from such vendors as Oracle and SAP. The Datapipe acquisition is expected to close in Q4 2017, subject to regulatory approvals. Financial terms were not disclosed.

The linkup of Rackspace and Datapipe, based in Jersey City, N.J., will bring together an array of cloud management services and data center resources. Datapipe will provide data centers on the West Coast of the U.S., Brazil, China and Russia -- markets where Rackspace said it has limited or no presence. Datapipe also delivers colocation services in North America, South America, Europe and Asia; brings with it public sector customers such as the Department of Defense; and also offers managed services on China's Alibaba Cloud.

Rackspace, meanwhile, already offers managed Google Cloud Platform services along with a background in Microsoft, VMware and OpenStack private clouds. Those capabilities are now on the horizon for Datapipe customers in light of the Rackspace acquisition.

More deals on the way

Jeff Kaplan, managing director of THINKstrategies, a cloud consultancy in Wellesley, Mass., said transactions along the lines of the Rackspace-Datapipe deal look set to continue.

The consolidation of cloud service providers and the intensifying competition among them will fuel more acquisitions of this nature as they attempt to become more strategic, full-featured suppliers to their customers.
Jeff Kaplanmanaging director, THINKstrategies

"The consolidation of cloud service providers and the intensifying competition among them will fuel more acquisitions of this nature as they attempt to become more strategic, full-featured suppliers to their customers," he said. "And, companies which are providing managed services, like Rackspace, must expand their skills and services to help their customers contend with their escalating multicloud management challenges."

Indeed, the task of coordinating a mix of public cloud services and private cloud resources has become a chore for enterprises, which are just only beginning to understand the problem.

Rackspace acquisition: Integration challenge ahead

Once the Rackspace-Datapipe deal is done, the companies will address the integration of personnel, services and infrastructure. John Engates, Rackspace CTO, said Datapipe's products, services and employees "will be fully integrated into Rackspace organization, operations and branded portfolio."

He said the companies will operate as separate entities and conduct business as usual until the transaction closes. He noted Matt Bates, Rackspace's chief transformation officer, "will work with leaders across both companies to integrate Datapipe into Rackspace."

And while Datapipe will fill some geographic maps in Rackspace's data center coverage, it also introduces some overlap. For example, both companies operate data centers in Dallas, Frankfurt and London.

Engates said Datapipe's data center locations will continue to operate as usual, adding that further details on data center and office locations "will be decided during the integration process."

Next Steps

Read an interview with Rackspace's CSO

Learn about the implications of Datapipe's Adapt acquisition

Gain insight into the challenge of cloud migration

Dig Deeper on IT mergers and acquisitions