Personal computer maker Dell, Inc. (DELL: Quote) agreed Monday to acquire IT management solutions provider Quest Software, Inc. (QSFT: Quote) for $28 per share in an all-cash deal of about $2.4 billion, net of Quest's cash and debt.
Dell triumphed in a month long bidding war with private equity firm Insight Venture Partners, which had earlier agreed on a deal to take Quest private.
The latest offer represents 44 percent premium to Aliso Viejo, California-based Quest's unaffected closing price of $19.40 on April 8. The offer is also a 22 percent jump from the initial offer of $23 per share.
The deal, which has the approval of the boards of directors of both companies, is expected to close in Dell's third fiscal quarter. Meanwhile, the deal is only subject to approval by Quest's shareholders and customary conditions.
"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, Dell Software Group.
In its bid to reduce the company's reliance on the desktop PC and Laptop markets, Dell recently formed a software group to build upon its existing software expertise and to deliver end-to-end IT solutions.
Quest is seen as a strong strategic fit with Dell's software group. It will extend Dell's existing capabilities in systems management, security, data protection and workspace management, and set the foundation of a $1.2 billion software business annually.
"Clearly, Dell's distribution, reach and brand are well recognized in the industry. Combine that with Quest's software expertise and award-winning systems management products and you have a very powerful combination for our customers and partners," Quest Chairman and CEO Vinny Smith said in a statement.
Dell outbid Insight, which had originally agreed in early March to take Quest private for $23 per share that valued Quest at about $2.0 billion. Later, Insight sweetened its offer to $25.75 per share in mid-June after Quest received a $25.50 per share bid from an unnamed "strategic bidder". While sweetening its offer, Insight Venture also added private equity firm Vector Capital as a member of the buyout group.
Last week, Quest confirmed receipt of another proposal from an unnamed 'strategic bidder' for $27.50 per share in cash. Some reports named Dell to be the strategic bidder, while Dell spokesman declined to comment.
In Monday's regular trading session, DELL is currently trading at $12.38, down $0.13 or 1.04% on a volume of 1.41 million shares. In the past 52-week period, the stock has been trading in a range of $11.68 to $18.36.
QSFT is currently trading at $27.76, down $0.05 or 0.18% on a volume of 5.71 million shares. In the past 52-week period, the stock has been trading in a range of $14.61 to $27.98.
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by RTT Staff Writer
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