Rackspace said Thursday it has agreed to acquire TriCore Solutions, a leader in the management of enterprise applications, including enterprise resource planning (ERP) solutions from Oracle and SAP. The deal, the largest acquisition in Rackspace’s history, is expected to close in June.
Financial details were not disclosed. The purchase announcement comes a day after the managed-cloud provider named a new CEO, Joe Eazor, who begins work in June.
By acquiring TriCore, Rackspace will be able to provide expertise and support for enterprise applications that companies use to manage core functions such as manufacturing, logistics, procurement, supply chain management, customer service, human resources, and financial operations.
TriCore currently serves about 275 managed-service customers across a wide range of industries, including Arby’s Restaurant Group and Kelly-Moore Paints. The company’s revenues are growing rapidly and profitably with strong cash flow, according to a statement from Rackspace.
The ERP, business intelligence, and analytics and database managed services that TriCore supports are complex and expensive applications to run, costing companies about $3 billion a year. Rackspace expects the hosted segments of these markets will continue to grow.
“Our customers are asking us to move further ‘up the stack’ by expanding our managed application capabilities,” said Jeff Cotten, president and interim CEO of Rackspace. “TriCore’s services are among the best in that space and are highly complementary to ours. They will help enable us to deliver more of the services that our existing customers need, while opening the door to new opportunities across the globe.”
Led by CEO Mark Clayman, TriCore has been in operation since 1999 and currently employs 513 people, with 158 based in Norwell, Mass. TriCore also has offices in Berwyn, Penn., and Milwaukee. Another 355 employees work in India.
TriCore employees will continue to work out of the same locations, and Clayman and other key members of the TriCore management team will join Rackspace as part of the acquisition.
“TriCore and Rackspace are a great fit in terms of our cultures, and we offer complementary services,” Clayman stated. “We’ve worked for 18 years to develop our delivery expertise, create value for customers, and win their trust and loyalty. We are extremely excited to join the Rackspace team and leverage its brand and industry reach to continue to expand our offerings.”
In a blog post published Wednesday, newly named CEO Eazor hinted at this news:
“As a private company, we can move more aggressively and rapidly to allocate resources for long-term growth, to enhance our product offerings, to expand into new geographies, and make smart acquisitions.”