The stock price of takeover target Quest Software surged Thursday.
Is possible interest in buying the firm by IBM (NYSE: IBM) helping drive up shares?
Bloomberg news reported Thursday that JPMorgan Chase & Co. that bidders for Quest could include IBM, Dell (Nasdaq: Dell) or private equity firms with a target price of $28 a share.
Dell was in discussions to buy Quest, though negotiations broke down, a person familiar with the matter said on June 1. David Frink, a Dell spokesman declined to comment.
Dell is the unidentified strategic bidder that offered to buy Quest by topping Insight’s proposal, Reuters reported today, citing people familiar with the matter.
Back in March, the California-based company agreed to be acquired by Insight Venture Partners for $23 a share. But Quest disclosed Thursday that it had received what it termed a “superior offer.” The buyer was not identified.
“The definitive terms and conditions of a merger agreement detailing the proposal have been fully negotiated, and the agreement is subject only to execution by [Quest],” the company said in a statement. “The proposal is not subject to any financing contingencies.”
Quest (Nasdaq: QSFT) develops tools to help companies manage computer systems.
Shares have risen above a new $25.50-a-share cash buyout offer from a strategic bidder that topped the previous agreement with Insight, Bloomberg reports.
The total value of a deal at that price would top $2.1 billion, according to Reuters.
The shares increased 8.5 percent to $25.88 early Thursday, for the biggest gain since May 9, when Quest said it had proposals after reaching a deal to be bought by Insight for $23 a share. Through Thursday, the stock had climbed 40 percent this year.
Shares ended they day up 9.2 percent to $26.06 at the close.
“The likely outcome here is Quest gets sold at $25.50,” said Brian Freed, an analyst at Wunderlich Securities in Denver, in an interview with Blloomberg. “You might see Insight raise its bid to match, but I really don’t see a bidding war here.”
Tracy Benelli, a Quest spokeswoman, and Blair Flicker, Insight Venture Partners general counsel, didn’t immediately return calls seeking comment.
Dell was in discussions to buy Quest, though negotiations broke down, a person familiar with the matter said on June 1. David Frink, a Dell spokesman, didn’t immediately return a call seeking comment today.
“There’s a sense of urgency at Dell that the PC business has limited life as a valuable segment because of increased competition in that business and that it needs to diversify with companies like Quest software,” said Shebly Seyrafi, an analyst with FBN Securities in New York, in an interview today.
JPMorgan Chase & Co. has said Quest is worth about $28, based on the software provider’s sales and cash flow, and could attract bids from International Business Machines Corp., Dell or private-equity firms.
Ed Barbini, an IBM spokeman, declined to comment on Quest.
Oracle Corp. (Nasdaq: ORCL) might also be interested in Quest, said Seyrafi. Carol Sato, an Oracle spokeswoman, didn’t immediately return a call for comment.
IBM employs some 10,000 people across North Carolina.
(Bloomberg news contributed to this report.)
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