Dell Is on the Acquisition Prowl Again, Now Looking at Quest Software
Those always-chatty bankers are at it again. Today they’ve told Bloomberg News that Dell is one of several companies in talks to acquire Quest Software.
Quest is a 25-year-old company that last year reported $857 million in sales and a $44 million net profit. Its speciality is creating management systems for enterprise software.
One product is called SharePlex, and it’s described as an Oracle replication product that promises to make a live copy of an Oracle database without slowing down its operation and availability. Another product for the Oracle environment is Toad, a tool that automates a lot of the maintenance tasks associated with running an Oracle database. Toad appears to be a flagship product as there are a few other versions of it for Sybase and SQL Server. Quest also builds tools to manage and maintain some Microsoft products like SharePoint and Exchange.
Quest’s market cap was just north of $2 billion as of yesterday. On today’s word of deal talks, its shares surged by 95 cents, or nearly 4 percent, to $26.13. It has been the subject of regular speculation all year that it might be taken out in an acquisition and as a result its shares have inflated by about a third during that time.
The purported offer from Dell is one of several coming in response to Quest’s agreement to be acquired by Insight Venture Partners in a deal to go private at $23 a share. The deal’s terms provide for a “go shop period” that allows the company to basically shop around for a better offer. It may get one. J.P. Morgan values Quest at $28 a share based on its sales and cash flow alone.
Also, Quest is right in the wheelhouse of the sort of things that Dell is trying to emphasize as it seeks to transform itself into an enterprise hardware, software and services concern, and de-emphasize its reliance on its traditional PC business. By at least one metric, that strategy is working — a little. Dell’s consumer PC business, for which it is best known, amounts to about one-fifth of revenue, while its enterprise-oriented businesses amount to about 50 percent. The wrinkle is that the enterprise bit includes PCs.