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Dell Wins Bid To Acquire Quest Software for $2.4 Billion

Putting to rest months of back-and-forth bidding against private equity vendors, Dell Inc. on Monday entered an agreement to acquire Quest Software Inc. for $2.4 billion.

The deal upends an agreement two weeks ago in which Quest had accepted an offer by Insight Venture Partners and Vector Capital that would have taken Quest private.

While the June 20 deal appeared to be the final salvo in the bidding war between Insight Venture and Dell, reports started to surface last week that Dell had sweetened its offer. Quest Chairman and CEO Vinny Smith was said to have preferred taking the company private. But in a statement announcing the deal, Smith extolled the benefits of Quest becoming part of Dell.

"Clearly, Dell's distribution, reach and brand are well recognized in the industry," Smith said in a statement. "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. With this transaction, Quest's products and employees become the foundation for Dell's critical software business."

Nabbing Quest, one of the largest established and independent suppliers of enterprise software tools, is a coup for John Swainson, who joined Dell in February to head the company's software group. Ironically, Quest, founded in 1987, is a key competitor of CA Technologies, the software giant Swainson headed after running IBM's software business.

"The addition of Quest will enable Dell to deliver more competitive server, storage, networking and end user computing solutions and services to customers," Swainson 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. We intend to build upon the strong momentum Quest brings to Dell."

The deal, approved by the boards of both companies, is contingent on shareholder approval and customary conditions. It's slated to close by the end of Dell's fiscal third quarter, which ends Oct. 31.

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.