Rackspace
Noah Berger | Bloomberg | Getty Images
Shares of Rackspace jumped more than 15% Monday morning on a report that Amazon is in talks to invest in the cloud service business.
Trading was stopped briefly due to volatility after the report was published in Reuters. A source familiar with the matter confirmed to CNBC that Amazon is in talks to invest in the company.
The Reuters report said Amazon is interested in acquiring a minority stake in Rackspace, which is helping companies move their data to Amazon Web Services (AWS), along with other cloud services. Rackspace held its IPO earlier this month. Private equity firm Apollo Global Management took over the majority stake in Rackspace in 2016, and it is unclear if the companies will all agree to a deal.
The Reuters report said it could take months for Amazon to work out an investment deal with Apollo.
Amazon’s AWS is the largest cloud company in terms of market share, followed by Microsoft’s Azure cloud and Alphabet’s Google Cloud. During the pandemic, cloud computing companies saw an increase as more and more companies moved their operations online.
Apollo and Rackspace declined to comment. Amazon did not immediately respond to a request for comment.
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