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June 14, 2012

Dell makes $2bn move for Quest Software

PC maker is revealed as "strategic bidder" as Quest courts buyers

By Steve Evans

Dell has been revealed as the strategic bidder that has launched a takeover battle for Quest Software, trumping an earlier offer from a venture capital firm.

On Thursday the IT management company released a statement claiming it had received a, "proposal from a strategic bidder to acquire all of the outstanding shares of Quest common stock." That bid was considered superior to the one received from Insight Venture Partners.

Now Reuters is claiming the second bidder is Dell, which has offered $25.50 per share, valuing the deal at $2.15bn.

Quest agreed to be acquired by the VC firm back in March, but kept its options open during the "go-shop" period. It has been engaged in discussions with Dell since then, according to Reuters. The news agency says talks broke down last month but it appears Dell has gone back in.

Now that Quest Software has received Dell’s bid and deemed it to be superior, Insight Venture Partners has the right to either match Dell’s bid or adjust its own. It has three days to make the decision.

Dell has bought a huge number of companies over the last few years as it looks to move away from its heritage as a PC maker. It moved into the services space back in 2009 with the acquisition of Perot Systems and since then has acquired companies in the security, cloud integration and virtualisation space.

Its acquisitions include Wyse Technology, SonicWall, SecureWorks, Kace, AppAssure and Force 10. It also acquired storage vendor Compellent after losing a bidding war with HP over 3PAR.

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It also recently hired former CA boss John Swainson to head up its new Software Group. Swainson will report directly to founder and CEO Michael Dell and will be tasked with selling Dell software to larger enterprises. It is part of Dell’s move to sell a combination of hardware, software and services to its customers, in what the company describes as a ‘$3 trillion industry’.

Quest Software describes itself as an IT management company. It is based in California and has around 4,000 employees. Its revenue for 2011 was around $850m. Its current CEO is Vinny Smith, who re-took the job earlier this year when Doug Garn was forced to step down on health grounds. Smith was previously in charge at Quest from 1997 to 2008 before stepping back from the day to day running of the company.

CBR recently spoke to Quest’s Kevin Norlin, VP and GM EMEA, to get a feel for what a possible suitor might be getting for their money.

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