Rackspace sells ‘non-core’ Cloud Sites arm to Liquid Web, CEO predicts Brexit downturn

James has more than a decade of experience as a tech journalist, writer and editor, and served as Editor in Chief of TechForge Media between 2017 and 2021. James was named as one of the top 20 UK technology influencers by Tyto, and has also been cited by Onalytica, Feedspot and Zsah as an influential cloud computing writer.

Picture credit: Rackspace Afterparty TechStars Boulder 2011, by Andrew Hyde, used under CC BY / Modified from original

Liquid Web, a Michigan based hosting and cloud services provider, has announced an agreement to purchase Rackspace’s Cloud Sites business unit, based in San Antonio.

The acquisition of Cloud Sites, which supports WordPress, Drupal, Joomla, .NET, and PHP among others, will give Liquid Web 550 more employees and 30,000 more global customers.

“With the addition of Cloud Sites, we further our mission to empower web professionals all over the world to create content and commerce without worry, free of problems and devoid of even one bit of hesitation by providing absolutely flawless web hosting,” said Jim Geiger, CEO of Liquid Web in a statement. “Our job is to delight and every single human being in our company is empowered to do so. Each of them has a relentless devotion to simplifying how our customers experience web hosting and cloud services.”

The news comes amidst interesting times at Rackspace. The company’s most recent financial results, had some illuminating stats – 277 customers on its AWS service in the last nine months, with 60% of them choosing the higher service option, compared to 211 Microsoft cloud customers by the end of July – as well as other titbits.

Chief executive Taylor Rhodes cited Gartner statistics on the impact of the Brexit EU referendum vote to analysts – 2017 IT spending growth would ‘almost certainly’ be negative, he said – and added that Cloud Sites was a ‘non-core’ business which would give Rackspace “more focus” by selling it.

Responding to an analyst question, and as transcribed by Seeking Alpha, Rhodes explained: “In our Cloud Sites business, it runs several hundred thousand websites for its customers and it competes in a market that if we wanted to really focus there, we’d have to make some substantial investment and instead, what we’ve been able to do is find a strategic buyer in Liquid Web, who will buy the company at a higher multiple than it was producing for us and allow us to both focus our portfolio, as well as find a happy home for that business and hope us raise some incremental funds that we can invest in growth.”

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