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Dell bulldozes Insight, Vector’s Quest Software deal with $2.4bn offer

2 Jul 2012

Insight Venture Partners and Vector Capital stand to reap $25m in termination fees after being trumped by Dell in their $2.17bn bid to buy Quest Software.

Insight was forced to up its offer for Quest two weeks ago after an attempted coup by the computer giant, with the firm having previously agreed to pay $2bn for the software company.

That valuation had caused several shareholders to call in a law firm in the belief it undervalued the stock

Under competitive pressure Insight brought on board Vector Capital as a partner in a revised $25.75 per share deal, beating Dell’s $25.50 per share offer at the time.

But the computer company returned with a $2.32bn bid last week, and has since agreed to pay $2.4bn for Quest.

Dell Software Group president John Swainson said, “The addition of Quest will enable Dell to deliver more competitive server, storage, networking and end user computing solutions and services to customers

“Quest’s suite of industry-leading software products, highly-talented team members and unique intellectual property will position us well in the largest and fastest growing areas of the software industry.

“We intend to build upon the strong momentum Quest brings to Dell.”

Insight and Vector will receive a termination fee of $25 million after Quest broke the deal for Dell’s superior offer, up significantly from the $4.2m termination clause Insight negotiated in its first offer.

California-based Quest said it generated $857m in global revenue based on its fiscal year 2011 results, at gross margins of 86 percent and operating margins of 11 percent.

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