Rackspace has acquired TriCore Solutions, a managed services provider (MSP) focused on Oracle and SAP applications, the companies have confirmed. The move comes at a critical time for Rackspace, which has experienced a CEO change, layoffs and an ownership change in the past year.
On the executive front, Rackspace this week named Joe Eazor (photo, top) as its new CEO, succeeding Taylor Rhodes, who resigned earlier this month. Eazor formerly was CEO of EarthLink. He has also held key roles at EMC, HP and EDS.
Rackspace, instead of competing head-on against Amazon Web Services and Microsoft Azure, has introduced managed services for third-party clouds and applications. TriCore, at least on paper, aligns well with that strategy. TriCore's expertise includes Oracle and SAP applications management -- particularly apps that address enterprise resource planning (ERP), manufacturing, logistics, procurement, supply chain management, customer service, HR and financial operations.
TriCore, founded in 1999, has 513 employees. CEO Mark Clayman and "other key members of the TriCore management team" will join Rackspace as part of the acquisition. Other than Clayman, specific executive names weren't disclosed.
TriCore: No Stranger to Acquisitions
TriCore itself has extensive M&A experience. The company landed on our Top 100 Merger and Acquisition List in early 2017. TriCore's key acquisitions include:
Those deals have allowed TriCore to scale rapidly. The company currently serves about 275 managed service customers -- including such companies as Arby’s Restaurant Group and Kelly-Moore Paints. TriCore's revenue is growing "rapidly and profitably, with strong free cash flow," the company said -- without disclosing specific financial metrics.
Rackspace: Ready to Rebound?
Rackspace, meanwhile, is a company in transition. Apollo Group, a private equity firm, acquired the managed CSP for $4.3 billion in August 2016. The move from public markets to private standing was supposed to shield Rackspace from business turbulence as the company attempted to build its AWS and Azure managed services practices.
Revenue in those areas has grown rapidly, but exact figures are undisclosed and other areas of Rackspace's business have struggled. The company cut 6 percent of its U.S. staff earlier this year and made an undisclosed number of international layoffs.
New CEO Joe Eazor hopes to accelerate organic growth -- while also leaning a bit on M&A deals like TriCore.