Dell Acquires Quest Software For $2.4 Billion

After weeks of speculation and extended negotiations, Dell announced it is acquiring data protection and systems management vendor Quest Software for $28 per share, totaling about $2.4 billion.

The acquisition comes after Quest Software placed itself on the block and after less-competitive offers came from Insight Venture Partners and Vector Capital. These organizations bid $25.75 per share in mid June.

Dell has said at numerous events in the last year that it seeks to be positioned as an end-to-end IT solutions vendor. To meet this goal, it has made 14 acquisitions in the last two years, for a total of 26 acquisitions since 1999. Recently, the company acquired thin client vendor Wyse Technologies for an undisclosed amount to bolster its cloud and desktop virtualization products. It also acquired Kace and Boomi in 2010. In the storage space, Dell acquired mid-range storage vendor Compellent in 2011 and iSCSI storage vendor EqualLogic in 2008; it added Exanet and deduplication and compression vendor Ocarina in 2010. The company also acquired Make Technologies, a specialist in application modernization, in 2012. To round out the networking side of its portfolio, Dell acquired Force 10 in 2011.

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The Compellent and EqualLogic acquisitions were strategic in helping Dell build out its own storage line of products. An early deal with EMC to resell mid-range Clariion storage ended in 2011. The Exanet acquisition brought Dell into the hotly contested market of scale-out network attached storage systems. And its acquisition of Ocarina Networks gave Dell a deduplication and compression technology, which Dell has promised to use across its PowerVault, Dell Compellent, and EqualLogic storage. Already, the company has used Ocarina in a backup appliance, the DR4000, introduced earlier this year.

Dell intends to add the Quest acquisition and products to its Dell Storage Group. The company's Quest One Identity and Access Management solutions blend well with its SonicWall and Secureworks security products. Quest's Performance Monitoring will bolster Dell's performance management portfolio. And its Windows Server Management solutions will complement its Clerity Solutions and Make Technologies acquisitions.

According to Dell, its software division is worth $1.2 billion. Quest which has 3,850 employees and 60 offices in 23 countries will "enable Dell to deliver more competitive server, storage,networking, and end user computing solutions and services to customers," said John Swainson, president of Dell Software Group.

Dell said the transaction has been approved by both companies' boards of directors, but is subject to approval by Quest's shareholders and customary conditions. The deal is expected to close in Dell's third fiscal quarter, between August and October 2012.

Deni Connor is founding analyst for Storage Strategies NOW, an industry analyst firm that focuses on storage, virtualization, and servers.