Buyout offer ups Quest shares

Quest Software, a maker of software to help companies manage cloud computer systems, rose above a new $25.50-a-share cash buyout offer from a strategic bidder that topped a previous agreement with Insight Venture Partners.

The shares increased 8.5% in New York in early trade, for the biggest gain since May 9, when Quest said it had proposals after reaching a deal to be bought by Insight for $23 a share. Through Wednesday, the stock had climbed 28% this year.

The company employs 3,900 worldwide and 220 people at its Citygate Business Park Mahon Point offices.

Aliso Viejo, California- based Quest said on Mar 9 it agreed to be acquired by Insight for $23 a share, and didn’t name the new bidder yesterday.

Two months later, Quest said it received several other proposals during a so-called “go-shop” period that it anticipated would lead to a superior offer.

“The likely outcome here is Quest gets sold at $25.50,” said Brian Freed, an analyst at Wunderlich Securities in Denver.

“You might see Insight raise its bid to match, but I really don’t see a bidding war here.”

Tracy Benelli, a Quest spokeswoman, and Blair Flicker, Insight Venture Partners general counsel, didn’t immediately return calls seeking comment.

Dell Inc was in discussions to buy Quest, though negotiations broke down, according to a source.

David Frink, a Dell spokesman, didn’t return a call seeking comment.

“There’s a sense of urgency at Dell that the PC business has limited life as a valuable segment because of increased competition in that business and that it needs to diversify with companies like Quest software,” said Shebly Seyrafi, an analyst with FBN Securities in New York, in an interview.

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

Oracle might also be interested in Quest, said Seyrafi. Carol Sato, an Oracle spokeswoman, didn’t return a call for comment.