Quest Software, makers of HP 3000 software since the late 1980s, has agreed to be purchased by Dell for $2.4 billion, according to company reports. Quest shareholders must vote on an offer to purchase company stock outright at $28 a share. The company was committed to a purchase by Insight Venture Partners at $2 billion. Quest will pay $37 million to back away from that deal.
Quest's CEO Vinny Smith, who owns one third of the company's stock, has agreed to vote in favor of the Dell acquisition. Dell will double the size of its software business by purchasing Quest, which makes the Bridgeware data migration solution being sold to HP 3000 shops both migrating and homesteading.
The history of 3000 software companies purchased by larger partners has had spots both high and low for purchasers and customers of existing products. Quest's got a massive business running in software to help with database management, principally Oracle. The HP 3000 products such as the data-mirroring NetBase (which was once sold as SharePlex by HP) or NFS/iX is a fraction of the revenue Quest generates.
A $2.4 billion acquistion is small compared to the $5 billion IBM paid for Cognos. Speedware sold itself to Activant for $114 million in 2005. Five years later Speedware took itself back from Activant, after the purchasing company didn't fully value the future of the Speedware Ltd. segment of the company. Activant was an ERP company interested in the ERP holdings of Speedware.
The Powerhouse products at Cognos have lost their profile in the much larger IBM software operations. One customer said their license was changed without any notice from IBM. Accuride was also receiving an IBM notice by email every 15 minutes about the need to renew a support license. A day's worth of search was needed to find an IBM staffer to turn off that noise.
John Swainson, the president of Dell's software group, said "This becomes the cornerstone asset for Dell’s software business." Dell said in June that it plans to boost its datacenter hardware, software and services business to more than $27 billion by fiscal 2016.
The Times story said monitoring and single sign-on software was the biggest lure to buying Quest.
According to Mr. Swainson, Dell was particularly attracted to Quest’s application monitoring software and its identity access software, which allows users to access multiple password-protected accounts with a single login. At $28 a share, Dell’s offer is 22 percent higher than Insight’s starting bid — and 33 percent higher than the average daily price of Quest’s stock in February. Still, analysts say the company could wring out more value from Quest, based on possible cuts to its sales force and accounting departments.
Quest has 3,850 employees, more than 1,500 in sales and 1,300 developers. Dell's biggest acquisition up to now has been the $3.9 billion Perot Systems in 2009. Dell's profits from the low-margin consumer PC end of its business have been in free-fall. In the most recent quarter the company's profits fell 33 percent to $635 million. Dell's workforce is 109,000.
While there is no mention of Bridgeware or any other HP 3000 software in Quest's press release about the sale, it's possible those products could be sold off by Dell. Such a move would let Dell focus on the Quest One, Performance Monitoring, Windows Server Management and Database Management products -- all of which were noted in the release.