Dell wins bidding war for IT management firm Quest Software

Service Management

by Steve Evans| 02 July 2012

$2.4bn deal will see Quest fit into Dell's burgeoning Software Group

After weeks of rumours it has been confirmed that Dell had entered into a definitive agreement to acquire IT management firm Quest Software.

The deal is valued at around $2.4bn ($1.5bn) net of Quest's cash and debt and is expected to close in Dell's third fiscal quarter, subject to approval by Quest's shareholders and customary conditions, the parties announced.

Quest's portfolio includes tools for database, virtualisation, applications and Windows server management. It also operates Quest One Identity and Access Management software, which will sit within Dell's expanding security division, which already includes the likes of SonicWall and SecureWorks.

Quest will become part of Dell's recently established Software Group, headed by former CA CEO John Swainson. "The addition of Quest will enable Dell to deliver more competitive server, storage, networking and end user computing solutions and services to customers," he said.

"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," Swainson added.

Quest's CEO Vinny Smith, who returned to the role in February this year, added: "Clearly, Dell's distribution, reach and brand are well recognised 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."

Speculation over Quest's future has been rife for some time. The company revealed it had agreed to be acquired by private equity firm Insight Ventures in March this year but was looking for other suitors during the "go-shop" period.

Quest had been in discussions on and off with Dell since then. According to some reports talks broke down in May this year, but by June a deal was back on, with Reuters reporting that Dell had emerged as the strategic bidder Quest wanted to do business with.

A $2.15bn deal was rumoured in June before another bid of just over $2.3bn was apparently made at the end of the month. Now both parties have settled on a price of $2.4bn and the deal looks set to close during Dell's third fiscal quarter.

The move is the latest from Dell as it looks to move away from low-margin PC making and towards more lucrative software and services. 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.

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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