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Quest Software To Be Taken Private By Insight Venture Partners For $23/share

3/9/2012 10:43 AM ET

IT management solutions provider Quest Software, Inc. (QSFT: Quote) agreed Friday to be taken private by Insight Venture Partners for $23.00 per share in an all-cash deal that values the company at about $2.0 billion. The deal, primarily subject to majority shareholder approval, is expected to close in the third quarter.

The deal is also unanimously approved by Quest's board, and has recommend that its stockholders vote in favor of the proposed deal.

"We are pleased to have successfully negotiated a transaction that includes an attractive upfront premium for Quest's shareholders, an all-cash deal that would eliminate ongoing execution risk following a transaction, and that compares favorably with Quest's standalone alternatives," said John Dirks, Chairman of the Special Committee.

Founded in 1995, Insight Venture Partners is a leading private equity and venture capital firm focused on the global software, infrastructure software, Internet and data-services industries.

The deal will see Quest shareholders receive cash of $23 per share, representing an 18.6 percent premium to Quest's closing price of $19.40 on Thursday. Quest shares are surging more than 22 percent in Friday's trading to match up with the offer price.

The deal will be financed with $210 million in equity from Insight, a rollover of Vinny Smith's shares and $1.195 billion of debt financing from J.P. Morgan, RBC Capital and Barclays Capital.

Aliso Viejo, California-based Quest said its Chairman and CEO Vinny Smith and existing senior management team will continue to remain in the privately-held company after closure of the deal, with its headquarters maintained in California.

Meanwhile, Smith has agreed to roll over his 34 percent stake in Quest into the newly created privately-owned entity. He has also agreed to vote his shares in favor of the deal.

"As a private company, we will have increased flexibility to drive innovation across our product lines and execute our long-term strategy. We expect this strategic partnership with Insight, with whom we have worked for many years, will ensure the Company has a secure foundation and a commitment to investment in the Company's long-term growth," Smith noted.

The deal provides for a 60-day go-shop provision that allows the Quest to solicit and consider alternative offers. The deal also calls for Quest to pay a $4.2 million break-up fee if the deal is terminated due to receipt of a superior offer. However, the break-up fee increases to $6.3 million after the end of the go-shop period.

In Friday's regular trading session, QSFT is currently trading at $23.70, up $4.30 or 22.16% on a volume of 5.38 million shares. In the past 52-week period, the stock has been trading in a range of $14.61 to $26.15.

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by RTT Staff Writer

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