Quest Software Object of Bidding War

Database software maker Quest Software Inc. (NASDAQ: QSFT) said this morning that the company had received a takeover offer of $25.50/share from an unnamed “strategic bidder.” The company had already agreed to a March takeover bid of $23/share from Insight Venture Partners, with a 60-day ‘go-shop’ period that Quest essentially said it would ignore.

Quest’s board has determined that the new offer is a “Superior Proposal,” but has stopped short of recommending a vote in favor of it. In fact, the board reiterated its support of the proposal from Insight:

Under the Insight Merger Agreement, Insight has certain matching rights, including the right to propose modifications to the terms of the Insight Merger Agreement and related agreements prior to the expiration of a minimum three-business-day period. If the proposal continues to constitute a Superior Proposal after the expiration of such period, the Company expects to terminate the Insight Merger Agreement and related agreements and to enter into a binding written definitive agreement in connection with the Superior Proposal.

Quest’s board has also offered the strategic bidder an option to acquire 19.9% of the company’s shares and pay a break-up fee of 2% or 3.5% if the new bid is not accepted by shareholders or is terminated “under certain circumstances.”

Shares of Quest are up about 8% at $25.77 in a 52-week range of $14.61-$26.73.

Paul Ausick