Dell deal for Quest is off as takeover talks break down
TAKEOVER talks between technology giant Dell and Quest Software have broken down, with a deal between the two no longer expected. Both US computer firms have operations and significant numbers of employees in Ireland.
Computer maker Dell employs 2,300 here. The smaller Quest Software is valued at around €2.5bn, and employs around 100 at an Irish operation in Cork, which was set up only last year. The Cork unit is scheduled to expand to 150 staff by 2013.
News that a deal will not go ahead means it's the second time in little over a month that Dell has failed to buy the smaller software firm.
The attempted takeover of Quest comes as Dell tries to emerge from its roots as a computer manufacturer to become a full-service IT business, including by buying higher-margin software businesses and spending billions on research and development for its business-oriented server and data centre units.
Quest fits into that model because it creates software that helps customers manage IT systems by monitoring the performance of applications that run databases and servers.
The process has helped boost jobs numbers in Ireland, compensating for the loss of 1,900 manufacturing jobs in Limerick announced in 2009.
Last year Dell bought Compellent Technologies, after being piped by rival HP in bidding for data storage firm 3PAR, and Force10 Networks, a security software maker that also had a base in Limerick.
So far this year, Dell has bought AppAssure, Clerity Solutions and SonicWALL, and agreed to buy Wyse Technology.
Dell's efforts to buy Quest Software broke down over the weekend and the companies are no longer in talks, according to a person with knowledge of the matter. The two companies have a long history as business partners -- even prior to the takeover offer.
Dell is one of Quest's five main trading partners, while Quest is in the top 10 of companies that do business with Dell.
"There's a multitude of reasons why they could break down, and it could have just got to the point of bidding where Dell didn't want to play anymore," said Brian Freed, an analyst at Wunderlich Securities.
He said Microsoft, which employs around 2,500 people in Ireland, could also bid for Quest.
In March, Quest agreed to be bought by private-equity firm Insight Venture Partners, but has confirmed receiving other offers.
Despite the reinvention, Dell disappointed the markets in May when it reported a drop in first-quarter profits.
Dell reported net income of $535m (€430m), down one-third compared to the same time a year earlier.
Earnings-per-share came in at 43c, less than analysts' forcecasts of 46c a share. (Bloomberg and Reuters)