Rackspace Prices IPO

Rackspace (RAX) priced today at $12.50 / share near the low end of a range of $12 to $16 per share through a dutch auction process.

It was a tough deal to get through even with Rackspace’s high quality numbers. They ended up raising $187.5 Million in cash (down from an initial desire to raise $400 Million when they filed back in April 2008). Still, it’s an opening and a deal done … let’s see who follows.

Stock started trading at $10/share down from the pricing of $12.50/share, and closed at $10 after a climb for most of the day. See below …

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Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC and Merrill Lynch & Co. are acting as joint book-running managers for the offering. W.R. Hambrecht + Co., LLC, Jefferies & Company, Inc., Cowen and Company, LLC, RBC Capital Markets Corporation, JMP Securities LLC, Signal Hill Capital Group LLC, and E*TRADE Securities LLC are the co-managers for the offering.

It appears that enough buyers exist in the $100 Million range to get IPOs out … will be interesting to see what kind of liquidity exists above and below that threshold, or even if more try to come out in the $100 Million range.

  • John Hooks

    Brian – as my profs at HBS, Lerner & Hardymon taught me a few years ago – value creation through innovation and unfair advantage are the ultimate determinant of market value. Recently, I've seen very few deals go through, even on the High-tech M&A side, because they lacked a clear vision. Kudos to you and the nGenera SMT for picking ones that will drive growth and enhance shareholder value.

    We'll see if the recent pattern of IPOs above $100M will trickle down to smaller offerings, though. I've yet to see it.

  • John Hooks

    Brian – as my profs at HBS, Lerner & Hardymon taught me a few years ago – value creation through innovation and unfair advantage are the ultimate determinant of market value. Recently, I've seen very few deals go through, even on the High-tech M&A side, because they lacked a clear vision. Kudos to you and the nGenera SMT for picking ones that will drive growth and enhance shareholder value.

    We'll see if the recent pattern of IPOs above $100M will trickle down to smaller offerings, though. I've yet to see it.