NEW YORK (TheStreet) –– Rackspace (RAX) shares plunged after the cloud computing company announced it ended its formal review process and would remain independent, removing speculation the company would be sold.
San Antonio-based Rackspace had previously disclosed it was in discussions with multiple parties who had "expressed interest in exploring a strategic relationship, ranging from partnership to acquisition," but ultimately after conductingi ts due diligence Rackspace's board decided to end the acquisition talks.
"We ran a thorough process under the direction of our board of directors, independent advisors, and a Strategic Transaction Committee of the Board," said Rackspace's co-founder and chairman Graham Weston said in a statement. "In this process we talked to a diverse group of interested parties and entertained different proposals. None of these proposals were deemed to have as much value as the expected value of our standalone plan. We concluded that the company is best positioned to drive value for shareholders, customers and Rackers through the continued execution of its strategic plan to capitalize on the growing market opportunity for managed cloud services."
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Shares of Rackspace were plunging in early Wednesday trading, falling 17.3% to $32.55.
The company also announced that it had considered buying back stock, but determined that it was not prudent to buy back its own stock to make "the appropriate investments" to keep the company's strategy on track.
Rackspace also announced that Weston, who had been Rackspace's CEO since February, would become non-executive chairman, and would be replaced by Taylor Rhodes, effective immediately. Rhodes, who had been Rackspace's president, would also become a member of the board.
Following the announcement, analysts were cautiously positive on the company's future prospects, despite the lack of a strategic buyer. Here's what a few of them had to say: