Market Overview

Quest Receives Higher Bid; Stock Soars

Quest Software (NASDAQ: QSFT) said on Thursday that it has received a buyout bid worth $2.15 billion, or $25.50 per share, from an undisclosed buyer. The news has sent Quest stock up more than 9% to above $26.00 in mid-day trading. In March, Quest had agreed to be acquired by Insight Venture Partners for $23 per share, in a deal that was valued at around $2 billion.

As part of the proposed buyout deal, Quest was given a 60 day "go-shop" period where the company could solicit superior offers. Subsequently, Dell (NASDAQ: DELL) approached the company about an acquisition, but those talks reportedly broke down. On Thursday, Quest said that its board of directors has decided that the $25.50 offer from the unnamed party is superior to Insight's bid and that it has notified the private equity firm. Insight will have three days to match the offer.

If Quest accepts an offer from another buyer besides Insight, it will be required to pay the firm a break-up fee of either $4.2 million or $6.3 million, with the exact amount of the fee determined by the timing of the superior proposal. With QSFT shares trading above the buyout price of $25.50 the market clearly believes that there is a chance that a bidding war could ensue between multiple parties.

Wunderlich Securities analyst Brian Freed, however, told Bloomberg that “The likely outcome here is Quest gets sold at $25.50. You might see Insight raise its bid to match, but I really don't see a bidding war here.”

JPMorgan Chase has suggested that the company is worth as much as $28.00 per share based on sales and cash flows. Market participants are speculating about numerous companies who could be interested in Quest, including Dell, IBM (NYSE: IBM), and Oracle (NASDAQ: ORCL) along with a host of private equity firms.

After today's surge, QSFT shares have now risen more than 40% in 2012 and are up roughly 24% over the last year. Quest Software, Inc. (Quest) designs, develops, markets, distributes, and supports enterprise systems management software products.

Posted-In: News Hedge Funds M&A Intraday Update Movers General Best of Benzinga

 

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