Dell Ups Bid for Quest Software to $2.32 Billion: Reports

Dell, which is looking to become an enterprise IT solutions provider, is in a bidding war with Insight Venture Partners for Quest Software.

Dell reportedly has upped its offer for enterprise software maker Quest Software to about $2.32 billion, escalating a bidding war with investment firm Insight Venture Partners.

Quest officials disclosed June 25 that an unnamed bidder had increased its offer to $27.50 per share, though anonymous sources told Reuters and BloombergBusinessweek that the bidder was Dell. The world€™s third-largest PC maker has been named in several reports over the past few weeks as being one of the tech vendors more interested in buying Quest, and less than two weeks ago reportedly offered $2.15 billion for the company.

Dell is bidding against Insight Venture Partners, an investment group that in March offered $2 billion to buy the 25-year-old software maker. Quest executives accepted the bid, but were given a period of time to shop around the offer to see if they could find a better deal somewhere else.

Quest officials have said that they have received interest from several companies, and that the latest offer is superior to any others. Insight Venture Partners can now match the latest bid or adjust its own offer.

Neither Dell nor Quest spokespeople have commented on the reported bidding war.

Dell is no stranger to bidding wars. In 2010, the company and Hewlett-Packard engaged in a high-profile 10-day bidding contest for storage vendor 3Par, a competition that HP eventually won with a bid of about $2.35 billion. Dell CEO Michael Dell said afterward that he believed HP vastly overpaid for the storage company, and that he was glad his company had pulled out of the bidding war.

Dell has since bought other storage technology vendors, including Compellent and Ocarina Networks.

Dell€™s interest in buying 3Par and the other storage companies came from the company€™s initiative to grow beyond its roots as a PC and server maker and become an enterprise IT solutions provider, enabling it to sell higher-margin products. That same desire is driving similar acquisition efforts in other areas, including networking and software.

Quest, which has been a partner of Dell€™s since 2004, sells software that is designed to help businesses manage database, server and user workspaces, protect and back up data, and monitor performance. It would fall in line with Dell€™s strategy, which is to sell software that complements what it€™s doing with IT solutions, rather than become a one-off software vendor.

During a meeting with analysts earlier this month, Michael Dell and other executives said the company still has significant growing to do in a number of areas, including storage, networking and software, and that acquisitions would be a key tool to accomplish that.

"We have a modest software business, and that's an area where we can grow rapidly," Dell told the analysts, adding that the company has "some nice acquisitions, which are off to a good start."