By Victoria Stilwell
Business-software maker Quest Software Inc. (QSFT) agreed to be
acquired by Dell Inc. (DELL) in a cash deal worth $2.36 billion,
bringing a bidding war with a private-equity group to a close.
Quest shareholders will receive $28 a share, up significantly
from the private-equity group's initial bid of $23 and marking a
0.7% premium to Friday's close. The offer is the latest in a
months-long bidding war with a buyout group led by Insight Venture
Partners and joined by buyout firm Vector Capital and Quest Chief
Executive Vinny Smith.
Quest hadn't previously identified Dell as the rival bidder,
though the company was widely named in media reports.
Quest, of Aliso Viejo, Calif., has faced mounting competition in
its traditional specialty--software for managing databases--as
vendors such as Oracle Corp. (ORCL) have introduced their own
management tools. Quest Software responded by trying to diversify
its business by acquiring smaller rivals.
The private-equity group initially agreed to buy Quest in March
for $23 a share, later raising that offer to $25.75 a share, or
$2.17 billion.
Dell last week offered $27.50 a share, or about $2.32 billion
for Quest. Insight had the opportunity to match or beat the
increased offer but struggled to put together financing despite
last-minute efforts by Smith, The Wall Street Journal reported
citing people familiar with the matter.
Quest last week said Dell's offer was superior without
identifying the bidder.
The deal is expected to close in Dell's fiscal third
quarter.
"The addition of Quest will enable Dell to deliver more
competitive server, storage, networking and end user computing
solutions and services to customers," said John Swainson, president
of Dell Software Group. "Quest's suite of industry-leading software
products, highly talented team members and unique intellectual
property will position us well in the largest and fastest growing
areas of the software industry."
Quest is the latest in a string of deals as it looks to expand
past its core business of selling PCs. Dell earlier this year
formed a unit dedicated to selling software and hired Swainson, the
former head of CA Inc. (CA), to run it. Dell has announced several
acquisitions this year, including security firm Sonicwall Inc. and
"cloud computing" specialist Wyse Technology Inc.
The fight over Quest echoes a similar battle Dell waged for
high-end data-storage maker 3Par Inc. in 2010. Dell eventually
bowed out after Hewlett-Packard Co. (HPQ) bid $1.6 billion for the
company, which makes rapidly accessible storage drives that allow
corporations to run more efficient databases.
Shares of Quest slipped 0.4% to $27.70 in recent premarket trade
as shares of Dell rose 1% to $12.63. Quest's stock is up 50% so far
this year, while Dell's has fallen 14% in the same time period.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com