--Private equity firms plan debt-financed offer to take firm
private
--Raised offer trumps $25.50 per-share bid from undisclosed
party
--CEO Vinny Smith would roll over most personal stock under
proposal
(Updates with background on undisclosed bidder, Vector Capital's
role in proposal)
By Drew FitzGerald
Insight Venture Partners added fellow private-equity firm Vector
Capital to its effort to take Quest Software Inc. (QSFT) private,
raising the data-management company's latest buyout bid to about
$2.17 billion.
The $25.75 per-share offer tops a $25.50 bid an undisclosed
party made for Quest last Thursday, as well as Insight's original
March offer of $23 a share.
Reuters last week reported Dell Inc. (DELL) was the undisclosed
bidder competing with Insight to buy Quest, which offers a range of
software for databases, servers, operating systems and virtual
environments that analysts say fit with Dell's strategic
position.
A Dell spokesman wasn't immediately available for comment.
The two buyout firms plan to finance the deal with $187 million
apiece, along with a rollover of at least 84% of Chairman and Chief
Executive Vinny Smith's existing shares and about $1.2 billion of
debt financing.
Smith, who recused himself from the board vote to deem the offer
a superior proposal, would remain chief of the software company
after the buyout, according to a securities filing.
Quest also agreed to increase the termination fee to $25 million
from $6.3 million if the go-private offer fails. The company
Tuesday said the undisclosed bidder's offer is no longer superior
to Insight's offer.
Quest, which has more than 100,000 customers, has faced
increased competition from companies that build enterprise systems
for which it traditionally provided software, such as Oracle Corp.
(ORCL), which has been building its own tools to manage
systems.
Shares slid 1.4% to $26.15 in recent after-hours trading,
suggesting shareholders were hoping for an even higher offer. The
stock has climbed 43% since the start of the year.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
--Nathalie Tadena contributed to this article