Quest Received Multiple Buyout Proposals During Shop Period

Quest Software Inc. (QSFT), which agreed in March to be bought by private-equity firm Insight Venture Partners for about $2 billion, said it received several other offers during a so-called “go-shop” period.

Many of the options are “reasonably expected to lead to a superior proposal,” the Aliso Viejo, California-based company said today in a statement. Quest said it may continue discussions with other bidders, though it “has not yet determined that any of the alternative proposals constitute a superior proposal under the merger agreement.”

Quest, a provider of business software for managing and protecting data, said on March 9 it had agreed to be acquired by Insight for $23 a share. The stock has surged 18 percent since the agreement was announced, suggesting that investors anticipate a higher bid.

“They now appear very likely to take a superior offer,” said Brian Freed, an analyst at Wunderlich Securities in Denver, who has a hold rating on the shares. “It either means someone else makes a bid superior to Insight, or Insight moves up its bid.”

The shares jumped 10 percent to $25.17 at the close in New York, the biggest increase since the Insight deal announcement. The stock has gained 35 percent this year.

JPMorgan Chase & Co. has said Quest is worth about $28, based on the software provider’s sales and cash flow, and could attract bids from International Business Machines Corp., Dell Inc. (DELL) or private-equity firms.

Higher Offers

Tracy Benelli, a spokeswoman at Quest, and Erica Harris, an Insight spokeswoman, didn’t return calls seeking comment. Doug Shelton, a spokesman for IBM, and David Frink, a spokesman for Dell, declined to comment on speculation.

Insight is likely to raise its bid, though it may be hard for a financial buyer to match an offer from a strategic purchaser, Freed said. Quest could be sold for about $26 a share, he said.

“If a new buyer is someone already in the software business who could garner operating leverage, they could always pay significantly more and yield a return,” Freed said.

Quest agreed to pay Insight $6.3 million if it finds another buyer after the end of the go-shop period, which has now expired.

To contact the reporter on this story: Sarah Frier in New York at

To contact the editor responsible for this story: Tom Giles at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.