March 27 (Bloomberg) -- Quest Software Inc., the Aliso Viejo, California-based provider of business software for managing and protecting data, was sued by an investor contending a $2 billion buyout offer by Insight Venture Partners is “inadequate.”
The offer is “preferential” to New York-based Insight and “detrimental” to shareholders, the Central Laborers’ Pension Fund said in the complaint filed today in Delaware Chancery Court in Wilmington.
“The fact that the company’s stock is trading above the offer price is a strong indicator that the market views the offer price as inferior to the inherent value of the company’s stock,” the pension fund said in the complaint.
Quest has traded above the $23-a-share offer every day since the company announced March 9 that it would sell itself to Venture Partners, which also owns stakes in Twitter Inc. and Zumba Fitness LLC. The offer represents a 13 percent premium to Quest’s average 20-day stock price, which compares to an average premium of 17 percent on more than 1,000 applications-software acquisitions in the past five years, according to data compiled by Bloomberg.
Quest is worth $26 to $28 a share, the pension fund said in its complaint, citing a March 12 report by JPMorgan Chase & Co. The fund is seeking to represent all shareholders in its bid for a court order barring the deal.
Tom Johnson, an outside spokesman for Quest, had no immediate comment.
Quest rose 1 cent to $24.01 at 2:54 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 29 percent this year.
The case is Central Laborers’ Pension Fund v. Quest Software Inc., CA7357, Delaware Chancery Court (Wilmington).
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