Rackspace Hosting, Inc. (RAX) Shares Jump on Hewlett-Packard Company (HPQ) Rumors, HP Again Denies Them


Rackspace Hosting, Inc. (NYSE:RAX) shares have jumped 2% today on a fresh round of rumors that Hewlett-Packard Company (NYSE:HPQ) is interested in purchasing the cloud services company; rumors which HP has subsequently denied according to re/code.


Rackspace Hosting, Inc. (NYSE:RAX) shares also spiked briefly in early July on rumors that Hewlett-Packard Company (NYSE:HPQ) had made an offer to buy the company valued at $43 per share; rumors which also turned out to be false. At the time, International Business Machines Corp. (NYSE:IBM) was thought to be another potential suitor for Rackspace that had made a bid for the company. Rackspace Hosting, Inc. (NYSE:RAX)  was also rumored to be considering taking itself private.

The latest rumors surrounding a potential Rackspace Hosting, Inc. (NYSE:RAX) purchase seem to have begun swirling after HP CEO Meg Whitman told reporters during a conference call on Wednesday that acquisitions would be a part of Hewlett-Packard Company (NYSE:HPQ)’s future strategy. CFO Cathie Lesjak then added more fuel to the rumor mill fire by stating that Hewlett-Packard Company (NYSE:HPQ) had been limited in its ability to buyback shares during the last quarter because of “material, non-public information”. From there, it was easy enough for the rumor mill to suggest that a deal was potentially being worked on, or had been reached between the two companies, but could not be announced yet.

Rackspace Hosting, Inc. (NYSE:RAX) shares have lost nearly $45.00 in value and plummeted more than 50% over the course of the last 20 months, to just $34.00 from a high of $78.93 on January 25, 2013. It was announced on Monday that Blue Harbour Group LP had increased their stake in Rackspace to 6.4%, a 3.9% increase since their last 13F filing at the end of June. That stake indicates they may seek to drive Rackspace towards making a move, which does not necessarily mean trying to sell the company.

Israel Englander’s Millennium Management is another shareholder of Rackspace Hosting, Inc. (NYSE:RAX), as of their last 13F filing, with more than 1.1 million shares in the company.

Disclosure: none

Suggested Articles:

Cheapest Boarding Schools in Europe

Highest Paying Seasonal Jobs In America