Report: CenturyLink rumored to be making a deal to acquire RackSpace

CenturyLink (NYSE: CTL) is looking to acquire RackSpace in an effort to bolster its cloud service capabilities, reports Bloomberg, citing people familiar with the situation.

The service provider has been talking to RackSpace, which recently said it was conducting an internal review of its strategic options. Earlier this year, RackSpace hired Morgan Stanley to help it explore ways to expand its business after it said it was approached by multiple groups interested in a partnership or acquisition.

In February, RackSpace named company co-founder and Chairman Graham Weston to act as interim CEO after Lanham Napier retired after serving for eight years in the role.

However, one unidentified source told Bloomberg said that a deal might not happen, which was valued at $5.33 billion.

If such a deal were to come to fruition, it would enable CenturyLink to more effectively challenge cloud players such as Amazon Web Services (AWS) (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG).

Christina Weaver, a spokeswoman for Rackspace, told Bloomberg it could not comment. Justin Lopinot, a CenturyLink spokesman, told FierceTelecom in an e-mail that it also could not comment on "rumors or speculation."

Once a minor player in the overall and cloud business services space, CenturyLink has been aggressively building out its cloud services portfolio both organically and through various strategic acquisitions, including cloud application developer Tier 3 in November.

Besides acquiring other cloud-based providers, CenturyLink has also been expanding its cloud service footprint in the U.S. and major international markets, including Asia-Pacific, Canada and Europe. It recently opened its second data center in the greater Toronto area, a move that will give it an additional 100,000 square feet of raised floor space.

For more:
- Bloomberg has this article
- Reuters also has this coverage

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