Quest (Nasdaq: QSFT) Received Multiple Buyout Proposals During Shop Period

Shawshank, VA 5/9/12 (StreetBeat) -- Quest Software Inc. (Nasdaq: QSFT), which agreed in March to be bought by private-equity firm Insight Venture Partners for about $2 billion, received “multiple written proposals for potential alternative transactions” during a 60- day so-called “go-shop” period.

A special committee evaluating the offers determined that several are “reasonably expected to lead to a superior proposal,” the Aliso Viejo, California-based company said today in a statement. Quest said it may continue discussions with other bidders, though the committee “has not yet determined that any of the alternative proposals constitute a superior proposal under the merger agreement.”

Quest, a provider of business software for managing and protecting data, said on March 9 it had agreed to be acquired by Insight for $23 a share. The shares have surged 18 percent since the agreement was announced, suggesting that investors anticipate a higher bid.

“They now appear very likely to take a superior offer,” said Brian Freed, an analyst at Wunderlich Securities in Denver, who has a hold rating on the shares. “It either means someone else makes a bid superior to Insight, or Insight moves up its bid.”

The shares jumped 8.6 percent to $24.81 at 9:30 a.m. in New York, the biggest increase since the Insight deal announcement.

Insight is likely to raise its bid, though it may be hard for a financial buyer to match an offer from a strategic purchaser, Freed said. Quest could be sold for closer to $26 a share, he said.

“If a new buyer is someone already in the software business who could garner operating leverage, they could always pay significantly more and yield a return,” Freed said.

Tracy Benelli, a spokeswoman with Quest, and Erica Harris, an Insight spokeswoman, didn’t immediately return calls seeking comment.

Quest agreed to pay Insight $6.3 million if it finds another buyer after the end of the go-shop period, the company said on March 9.

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