Dell To Buy Quest Software For $2.4bn

Dell announced on Monday that it would buy Quest Software for $2.4 billion, as it looked to expand beyond its main business of selling personal computers.

Under the terms of the deal, Dell will pay $28 a share for Quest, emerging as the winner in a bidding war for the software company.

John Swainson, president of Dell’s software group, said in a statement. “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.”

Rob D. Owens, an analyst with Pacific Crest Securities, said: “At $28, it’s a pretty cheap valuation for Quest. There are growth areas in this market.”

With annual sales of $857 million, Quest Software sells a broad range of enterprise applications. While many of its legacy businesses, including software applications that support Oracle databases and Windows operating systems, are considered slower-growth businesses, Mr. Owens says he sees increasing demand for its back-up and recovery applications, virtualization services and its single sign-on solution, which allows users to securely access multiple password-protected accounts with a single log-in.

Deal-makers have been fighting over Quest in recent months.

In March, Quest agreed to a deal with Insight Venture Partners, which offered $23 a share for the company. Then the software maker announced in early June that it had received a bid of $25.50 a share from a strategic buyer, which was said to be Dell. While Insight Venture teamed up with Vector Capital on an increased bid, Dell trumped the offer on Monday.

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