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Report: Dell in Talks To Acquire Quest Software

Dell is reportedly in talks to acquire software tools supplier Quest Software Inc. in a deal that would vastly bolster the computer vendor's budding software business.

The two companies are in talks, according to a report in Bloomberg Businessweek on Friday citing unnamed knowledgeable sources.

Venture capital firm Insight Venture Partners agreed to acquire Quest in March for $2 billion but the company agreed to a so-called 60-day "go-shop" period, allowing it to consider superior offers. When that 60-day period ended, Quest announced that it had received offers from several qualified bidders under the agreement and would continue to furnish information to those companies.

A Quest spokeswoman said in an e-mail the company is not commenting on Friday's report. A Dell spokesman in a phone call said it doesn't comment on speculation. Insight Venture Partners did not respond to an e-mail.

Quest is a leading supplier of systems management and developer tools for both Java and Microsoft .NET environments that, among other things, manage multivendor databases, provide identity management and offer data protection. Quest also is a major supplier of tools to manage Microsoft environments, including SharePoint, SQL Server, Windows (both desktop and server), Exchange and Active Directory.

For Dell, grabbing Quest would greatly enhance its recently formed software business headed by its newly minted president John Swainson, the former CEO of CA and longtime head of IBM's software group. Deals on Swainson's watch include Dell's agreement to acquire AppAssure, Clerity Solutions, Make Software and SonicWall.

News of the talks comes just days after Dell reported a disappointing first quarter for the period ended May 4. Revenues of $14.4 billion were down 4 percent year-over-year and consumer spending dropped 12 percent. Dell has since increased its focus on the enterprise by beefing up its cloud computing, storage software and hardware portfolio and building its new software business. Dell also announced on Friday it has completed its acquisition of thin client system provider Wyse, announced in April.

With a deal for Quest yet to be confirmed or announced, other bidders could emerge, including Dell's largest rivals Hewlett-Packard, IBM and perhaps even BMC Software or CA. While HP is also looking to beef up its software business, a bid at this time would be surprising given the company's announcement that it will pare down its workforce by 27,000 employees by the end of 2014.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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