--Dell agrees to buy Quest Software for $2.36 billion
--PC maker beats out competing offers from private-equity
group
--Dell's buy continues push to expand beyond PCs
(Updates with additional details on Quest, buyout group, analyst
comment)
By Victoria Stilwell and Drew FitzGerald
Dell Inc. (DELL) announced Monday its agreement to buy
business-software maker Quest Software Inc. (QSFT) in a cash deal
worth $2.36 billion, ending a bidding war with a private-equity
group that included the company's chief executive.
Dell offered $28 a share for Quest, well above an initial bid of
$23 a share from Insight Venture Partners, a venture capital firm
that has a longstanding relationship with Quest and Vinny Smith,
its chairman and chief executive. Insight had partnered with
private-equity firm Vector Capital to raise its bid to $25.75 a
share, valuing the company at $2.17 billion.
Quest last week said Dell's offer was superior without
identifying the bidder. The buyout group considered Dell's latest
bid too high, according to a person familiar with the
situation.
The deal offers a 44% premium over Quest's share price in early
March, before the company received its initial offer. It values
Quest at about 16.9 times projected earnings.
Quest is the latest in a string of deals for Dell as the Round
Rock, Texas, company looks to expand past its core business of
selling PCs. Dell earlier this year formed a unit dedicated to
selling software and hired John Swainson, the former head of CA
Inc. (CA), to run it. Dell has announced several acquisitions this
year, including security firm Sonicwall Inc. and Wyse Technology
Inc., which specializes in Web-based software.
Analysis firm Stifel Nicolaus said Dell could focus on
integrating its existing software business with Quest's
data-security and virtualized desktop products that could work with
Wyse.
Quest, of Aliso Viejo, Calif., has faced mounting competition in
its traditional specialty--software for managing databases--as
vendors such as Oracle Corp. (ORCL) introduce their own management
tools. Quest has responded by trying to diversify its business by
acquiring smaller rivals that help technicians manage servers more
easily and protect data.
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 Mr. Smith, The Wall Street Journal reported,
citing people familiar with the matter.
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.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com