Dell backs out of deal with Quest

We reported back in April that Quest Software had been acquired by Insight Venture Partners in a $2billion deal. It seems that Dell were interested in Quest at that time.

Since then, however, things have cooled on the Dell front and Reuters now reports that Dell is no longer interested in acquiring Quest. Quest would have been Dell’s sixth acquisition of the year; remarkable considering we are still in June 2012 and the world economic climate is still unstable. Dell, Quest and Insight Venture Partners are all denying that they ever sat around the table together.

Tenuous from the start, this could have been an opportunity for Dell to break into the software market. This is not to be and the news saw share values fall for both companies, with Wall Street giving Dell a hard time. Given the hardware focus of Dell, it may only have been a matter of time before the top talent at Quest departed for safer waters. Interestingly, earlier in the year, Dell had formed a new software division under the leadership of former CA Technologies chief John Swaison to expand its enterprise systems appeal. Was Quest a target then? Quest would have meant a significant boost for Dell in cloud and infrastructure management in competing with other software companies like CA and IBM.

Quest builds tools to manage and maintain some Microsoft products like SharePoint and Exchange as well as Toad, a tool that automates a lot of the maintenance tasks associated with running an Oracle database.

How easily Quest would have been assimilated into the Dell family would have been interesting to watch. Quest is made up of a number of software companies, each with their own priorities and plans. One of the latest acquisitions is Blue Folder, which is a provider of field and professional service management solutions. The focus on providing innovative solutions and responding to customer demand is a key feature of Quest and may have been swallowed up in the corporate behemoth that is Dell.

If Dell has decided that Quest is not going to be part of their portfolio, what will then happen to Quest? Rumours abounded that Microsoft, IBM or Oracle were interested in Quest, but none of their negotiations went as far as Dell. There’s a break-off fee up to $6.3 million to Insight if Quest end up being acquired by another party. Quest is also facing several shareholder lawsuits over the way it’s handling the sale.