S&P puts Rackspace Hosting on watch

S&P said it placed its ratings on Rackspace Hosting Inc., including its BB- corporate credit rating, on CreditWatch with negative implications.

The CreditWatch placement follows Rackspace's announcement that it has entered into a definitive agreement to acquire Datapipe, a provider of managed cloud and colocation services.

“While financing terms have not been disclosed, we believe the company will pursue additional debt financing that could push leverage above our current 5x downgrade threshold,” S&P said in a news release.

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