Dell Said to Be Near Buying Quest to Gain Data Software

(Corrects timing of announcement in fourth paragraph.)

Dell Inc. (DELL) is near an agreement to buy Quest Software Inc. (QSFT), a maker of programs to manage corporate computer systems, prevailing in a bidding contest with Insight Venture Partners, people with knowledge of the matter said.

The acquisition may be announced as soon as today, said the people, who spoke on condition of anonymity because the talks are private. Aliso Viejo, California-based Quest said last week that it received an offer for $27.50 a share, or about $2.32 billion, from a company that it didn’t identify. Dell is that company, the people said.

The purchase would cap a months-long bidding war for Quest and fits with Dell’s aim to add technology that helps customers outfit data centers for handling storage and cloud computing. Quest’s software lets companies administer databases and servers, as well as back up information and recover lost data.

Several companies made offers for Quest since it said on March 9 that it had agreed to be bought by Insight Venture Partners, a private equity firm, for about $2 billion, or $23 a share. Earlier talks between Dell and Quest about an acquisition broke down, a person with knowledge of the matter said June 1.

Software Takeovers

Quest shares rose 0.2 percent to $27.81 on June 29 and have surged 50 percent this year amid speculation that another company might top Insight’s earlier bid. Dell, the world’s third-largest PC maker, climbed 4.7 percent to $12.51 on June 29. In German trading today, the stock rose 1.8 percent to the equivalent of $12.65 as of 11:51 a.m. in Frankfurt.

Kelly McGinnis, a spokeswoman for Dell, didn’t immediately respond to a request for comment. Quest spokesman Tom Johnson declined to comment.

There have been 530 takeovers of U.S. software companies announced so far this year, according to data compiled by Bloomberg, on pace to break the record 923 transactions set last year. The largest is SAP AG (SAP)’s planned $4.3 billion acquisition of Sunnyvale, California-based Ariba Inc. (ARBA), announced in May.

Dell told analysts at a June 13 meeting that it plans to use deals to boost revenue from data-center hardware, software and services by 45 percent to $27.5 billion by fiscal 2016, reducing the company’s reliance on the slow-growing desktop and notebook computer businesses.

Takeover Fight

The last time Dell engaged in a public takeover fight was in 2010, when it lost storage company 3Par Inc. to Hewlett- Packard Co. (HPQ), which bought it for $2.35 billion. That 18-day bidding contest tripled 3Par’s market value.

Michael Dell, founder of the Round Rock, Texas-based company, told Bloomberg News last year that Hewlett-Packard overpaid for 3Par, and he made the right decision in dropping out of the process.

Insight first invested in Quest in 1999 and was the company’s largest institutional investor at the time of its IPO that year, according to a regulatory filing at the time. Insight co-founder Jerry Murdock also served on Quest’s board of directors.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Zachary R. Mider in New York at zmider1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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