Managed Service Provider Week in Review: Buyouts & Rumors

There was definitely some moving and shaking in the managed services space this week with mergers and acquisitions topping the headlines. And in addition to the prominent deals being announced, a couple of potentially huge buyouts were rumored. If those deals reach fruition they could have an enormous impact on the cloud and managed services space at large.

Two of the big rumors would create a major disruption in the cloud IaaS space. CenturyLink (News - Alert) is reportedly interested in purchasing cloud vendor Rackspace, which could make them a formidable player in the infrastructure market. With toeholds in the telecom, data center hosting and cloud platform markets, Rackspace has the potential to elevate CenturyLink  as a leading infrastructure player. The rumor was followed by yesterday’s report that EMC (News - Alert) may be looking to sell its stake in virtualization giant VMware. And that IBM and HP have an interest in purchasing the company, which would elevate their respective positions within the cloud IaaS space.

In real acquisition news this week, LogMeIn (News - Alert) acquired Meldium, a startup company specializing in single sign-on (SSO) capabilities. The company also offers password and identity management for cloud apps, which will be a valuable enhancement for LogMeIn and a way for the company to support the BYOD trend. The deal was finalized for $15 million and Meldium’s employees will remain based in San Francisco.

On the merger front, MSP MegaPath (News - Alert) will sell its wholesale business and national colocation aggregation network to private equity firm Pivotal Group. Pivotal plans to merge the assets with Global Capacity (News - Alert), a wholly owned company offering connectivity as a service. The merger will give Global Capacity more than 400 new customers while MegaPath will use the sale proceeds to build out its managed and cloud services. MegaPath will focus exclusively on voice, MPLS, security networks and managed and cloud services.

In other interesting news, a new report from CloudMeriTalk found that despite all the advances and activity in the space, federal IT workers are still cautious when it comes to migrating IT services to the cloud. The report found that 89 percent of federal IT professionals are apprehensive because of the risks the cloud poses. They voiced their fears despite federal plans to double agency cloud use since the Federal Cloud Computing Strategy mandate was made in 2011.