Software Bidding War Continues (QSFT, ORCL, VMW)

Quest Software Inc. (NASDAQ: QSFT) remains a premium takeout name in the world of software mergers and buyouts.  Bloomberg has reported that Insight Venture Partners has now topped a $25.50 per share buyout offer to acquire Quest.  If true, the bid would top the offer received from a strategic bidder earlier this month.

We would note that the report is based upon a “person familiar with matter who asked not to be named” and that seems to be the new normal in M&A rumors. The rumor mill is alive and well.

Quest shares are worth some $2.24 billion as of now after a 1.6% gain to $26.62.  The 52-week range before today was $14.61 to $26.73 and the consensus Thomson Reuters price target objective is currently only $23.25 on the stock. The stock trades at 16-times the expected 2012 earnings per share and only about 2.4-times the expected 2012 revenues.

Quest Software develops enterprise systems management software for database management products, including Toad for Oracle Corporation (NASDAQ: ORCL) and cloud databases; another product is vFoglight for performance monitoring and capacity management of complex VMware Inc. (NYSE: VMW) ESX and Hyper-V environments.

JON C. OGG