Quest Software Inc. will go private in a $2.17 billion takeover deal led by two private equity firms, the Aliso Viejo-based company announced Tuesday.
The deal led by New York-based Insight Venture Partners and Vector Capital in San Francisco is valued at $25.75 per share, beating a $25.50 offer proposed last Friday from a strategic bidder widely believed to be Dell Inc., the world’s third-largest computer maker.
The buy was approved by a special committee formed by Quest’s board to review alternative bids. It is subject to standard shareholder and regulatory approvals.
The deal calls for the private equity firms to get a $25 million break-up fee, up from $6.3 million, if Quest’s board approves a superior bid. They would also get a $12 million expense reimbursement fee, up from $7 million.
Insight saw an earlier bid of $2 billion topped last week. It had the right to match competing offers within three business days.
The increased purchase price is a 33% premium of Quest’s stock on March 8, the day before Insight’s first bid was announced.
The transaction will be financed with $364 million in cash, with Insight and Vector each accounting for half the total, a rollover of at least 84% of Quest Chief Executive and Chairman Vinny Smith’s existing shares, and approximately $1.2 billion in debt financing from J.P. Morgan Chase Bank N.A., RBC Capital Markets and Barclays Capital.
The latest proposal could end a bidding war in the last week for the software maker.
Quest makes software that manages and improves on other business products from Redmond, Wash.-based Microsoft, IBM Corp. in New York and Redwood Shores-based Oracle Corp.
The company is one of Orange County’s biggest software makers with $857 million in 2011 sales. It has 3,000 workers overall, about 600 here.
Quest shares were down 1.7% in extended trading Tuesday to a market value of $2.2 billion.
