Dell Acquires Quest Software For $2.4 Billion

Another major acquisition for Dell this morning. The company announced it’s buying enterprise management software maker Quest Software for $2.4 billion. Under the terms of the agreement, Dell will pay $28.00 per share, which beat out Insight Venture Partners’ bid of $25.75 per share. Quest’s assets, including its access management software, performance monitoring solutions, Windows Server management solutions, database management, and more, will now serve to strengthen Dell’s recently formed Software Group.

The group, announcemed in February, is designed to enhance Dell’s solutions capabilities and help provide a new source of revenue as hardware sales decline. Dell hired John Swainson, formerly of IBM and CEO of CA, to serve as President of the Group. Since then, Dell has also acquired Wyse and SonicWALL. With Quest, the focus is on the data center side of the business.

Dell stated that the Quest acquisition will help it expand its software capabilities in “systems management, security, data protection and workspace management.” The company also cites a few key components from Quest Software’s family of solutions which held particular interest:

The Quest One Identity and Access Management solution family adds to Dell’s very strong set of security assets with SonicWALL and Secureworks, creating a comprehensive set of security solutions to address important customer needs.
Quest’s Performance Monitoring solutions for applications, networks and databases address a rapidly growing need for our customers. Industry analysts have consistently ranked Quest Foglight as a leading application performance monitoring solution. Businesses of all sizes are looking to reduce their IT complexity and automate workloads for their IT departments. Customers worldwide leverage Foglight to continually monitor their IT environments, proactively identifying and remedying performance issues before they become bigger problems.
Quest’s Windows Server Management solutions complement Dell Services’ rapidly growing application modernization practice with recently acquired Clerity Solutions and Make Technologies.
Effective database management is critical to the successful operation of most organizations. Quest’s Database Management capabilities offer a strong complement to Dell’s enterprise offering. Today, millions of DBAs, developers, and analysts around the world rely on Quest’s database management tools to simplify their work.

Quest’s software portfolio has generated $857 million in global revenue based on fiscal year 2011 results at gross margins of 86% and operating margins of 11%, Dell reported. It also has a 1,500-person strong software sales force and 1,300 software developers who will join Dell’s software group following the deal. Quest is based in Aliso Viejo, CA and has over 100,000 customers worldwide, including 87% of the Fortune 500. The company has a total of 3,850 employees in 60 offices in 23 countries.

The purchase served to end a bidding war that had lasted for several months, according to reports from sources at Bloomberg and others.