Filing Flows › Rackspace Technology (RXT) › Takeover & LBO
Is Rackspace Technology (RXT) a takeover target?
A leveraged buyout at today's price plus 30% ($3.41 a share) would return about 1% a year to a private-equity buyer over 5 years; no price, however low, gets a buyer to 20%. It already carries 19.1× EBITDA in net debt (the model flags anything over 6×), so a buyer could add little debt of its own. Historically 5.6% of companies with its figures were bought within a year (1.11× the average).
The buyout, step by step
| Entry | Amount | How |
|---|---|---|
| Offer price a share | $3.41 | today's $2.62 plus 30% |
| × shares | 250.1 million | |
| = Equity value | $852M | |
| + Debt refinanced | $2.8B | |
| − Cash | $111M | |
| = Enterprise value | $3.5B | 25.1× EBITDA of $140M |
| Fees | $70.6M | 2% of the price |
| New debt | $772M | 5.5× EBITDA at 7.65% a year; the limit that binds: 5.5× EBITDA |
| Buyer's own money | $2.8B | 79% of the cost |
5 years under the buyer
| Year | Revenue | EBITDA | Interest | Free cash flow | Debt left |
|---|---|---|---|---|---|
| Year 1 | $2.7B | $141M | $59.0M | $17.6M | $754M |
| Year 2 | $2.7B | $142M | $57.7M | $17.9M | $736M |
| Year 3 | $2.8B | $145M | $56.3M | $18.8M | $717M |
| Year 4 | $2.8B | $148M | $54.9M | $20.1M | $697M |
| Year 5 | $2.9B | $152M | $53.3M | $22.1M | $675M |
The exit and the buyer's return
| Exit | Amount | |
|---|---|---|
| Exit multiple | 23.7× EBITDA | today's trading multiple, before any premium |
| Enterprise value at exit | $3.6B | |
| − Debt left | $675M | |
| = Buyer's equity | $2.9B | |
| Money multiple | 1.04× | on $2.8B put in |
| Buyer's yearly return (IRR) | 0.8% |
Price against return
What the buyer makes at other premiums over today's $2.62.
| Premium | Price a share | Buyer's IRR |
|---|---|---|
| 10% | $2.88 | 1.8% |
| 20% | $3.14 | 1.3% |
| 30% | $3.41 | 0.8% |
| 40% | $3.67 | 0.3% |
| 50% | $3.93 | −0.1% |
The figures used
| Figure | Amount | |
|---|---|---|
| Revenue, last 12 months | $2.7B | |
| EBITDA, last 12 months | $140M | 5.2% of revenue |
| Depreciation and amortization | $228M | |
| Capital spending | $63.0M | |
| Debt | $2.8B | |
| Cash | $111M | |
| Share price | $2.62 | on Oct 30, 2026 |
Fixed rules, the same as the interactive view's starting point: the shares are bought at today's price plus 30%, the company's debt is refinanced and fees take 2%. New debt is the least of 5.5× EBITDA, 65% of the price and the amount whose interest EBITDA covers 2 times, at 7.65% a year (SOFR 3.89% plus the high-yield B spread 3.26% plus 0.5%, rates of Oct 15, 2026). Revenue grows 0.3% in the first year — the company's own rate, held between −3% and +8% — fading to 3% by year 5; the EBITDA margin, depreciation and capital spending stay at today's share of revenue; working capital takes 10% of each year's added revenue; tax is 21% of profit after interest. Every dollar of free cash flow repays debt. After 5 years the buyer sells at today's multiple of EBITDA.
What a takeover could cost
Takeovers in its sector paid a median premium of 30% over the share price before the deal (the middle half 12% to 31%), according to the 14 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Rackspace Technology would cost about $3.41 a share, $852M for all its shares.
| Premium | % | Price a share | All shares |
|---|---|---|---|
| Low end (a quarter of deals paid less) | 12% | $2.93 | $734M |
| Median | 30% | $3.41 | $852M |
| High end (a quarter paid more) | 31% | $3.43 | $858M |
The odds, from history
Historically 5.6% of companies with its figures were bought within a year (1.11× the average). Its figures put it in decile 7 of 10 (10 = the most likely to be bought). The odds come from a model of every merger proxy, tender-offer response and going-private statement filed on EDGAR since 2011, set against each company's size, margins, debt, cash flow and growth the year before.
Rackspace Technology's latest quarter
Rackspace Technology, Q2 2026: revenue $670M (+0.6% year over year), operating margin -5.0%, net loss $67.5M, operating cash flow −$31.5M. The chart follows the revenue to costs, profit and cash.
Questions
Is Rackspace Technology being acquired?
No headline, 8-K or 13D about a sale is on file in the last year.
Could private equity buy Rackspace Technology?
A leveraged buyout at today's price plus 30% ($3.41 a share) would return about 1% a year to a private-equity buyer over 5 years; no price, however low, gets a buyer to 20%. It already carries 19.1× EBITDA in net debt (the model flags anything over 6×), so a buyer could add little debt of its own.
What would a takeover of Rackspace Technology cost?
Takeovers in its sector paid a median premium of 30% over the share price before the deal (the middle half 12% to 31%), according to the 14 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Rackspace Technology would cost about $3.41 a share, $852M for all its shares.
Updated Nov 8, 2026. Read automatically from SEC filings and public data; errors are possible. Not investment advice.