This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dell Ups Turnaround Bet With $2.4B Quest Deal (Update 1)

Updated with analyst comments and additional data throughout

NEW YORK ( TheStreet) -- Struggling PC-maker Dell (DELL) has agreed to buy business software specialist Quest Software (QSFT) for $28 a share in cash -- or roughly $2.4 billion -- as it tries to reposition away from the shrinking personal computer market and into tech business services and analytics.

The bid by Dell confirms speculation that it was mulling a bid for Quest Software after the enterprise software specialist previously agreed to a $23 a share buyout offer by private equity firm and large shareholder Insight Venture Partners, which valued the Aliso Viejo, Calif.-based company at $2 billion.

However an unnamed "strategic bidder" during Quest Software's 60-day "go shop" period - presumably Dell -- raised the stakes and started a bidding war with Insight that's now pushed Quest Software's takeover price up by over 20%. Dell's secrecy in the process comes after it lost a heated 2010 bidding war with Hewlett Packard (HPQ - Get Report) for 3PAR, which nearly tripled the date center software maker's market value.

Monday's deal confirms previous Bloomberg reports that Dell would make a bid on Quest Software, in a move to bolster the world's third largest PC makers newly formed Software Group.

In a statement, Dell said that the acquisition will fit into its software unit, in an expansion of Dell's software capabilities in systems management, security, data protection and workspace management. Dell also said that the deal will complement its existing scalable business services, which include PC hardware, networking equipment and data storage services.

Already, Dell has been a serial acquirer in 2012, cutting a flurry of deals for IT services specialists like SonicWall, Wyse Technology and AppAssure Software. In particular, Dell highlighted Quest Software's strategic relevance to its existing security and applications monitoring and modernization units.

Monday's deal may be one of its most important software and services transformation steps yet. The deal is likely to use all of Dell's domestic cash balance, notes ISI group analyst Brian Marshall.

"We believe DELL will follow a similar playbook to past acquisitions by leveraging its large PC/server installed base, global distribution and brand to extract value from the acquisition," wrote Marshall in a note to clients. He estimates the acquisition will add 6 cents to Dell's calendar 2013 earnings. Still, Marshall maintains a neutral rating Dell, citing concerns that earnings per share and operating margin estimates are too high for the Round Rock, Tx-based company.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
HPQ $11.59 0.00%
AAPL $94.19 0.00%
FB $118.06 0.00%
GOOG $695.70 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs