Dell announced Monday it will acquire Quest Software, a database and IT management software vendor, for $2.4 billion.
Quest sells software that allows enterprises to administer databases and servers, back up and recover information and manage identities across multiple applications.
Under the terms of the deal, expected to close sometime in the third quarter of this year, Dell will pay $28 a share for Quest. The acquisition has been approved by both companies' board of directors, but is subject to regulatory approvals and a Quest shareholder vote.
“The addition of Quest will enable Dell to deliver more competitive server, storage, networking and end-user computing solutions and services to customers,” John Swainson, president of the Dell Software Group, said in a press release.
Quest Software sells a broad range of enterprise applications, which include database and server management, virtualization services, and identity management software. As part of Dell's recently formed Software Group, Quest's technology will provide a good base of software on which to expand, in the areas of systems management, security, data protection and workspace management, Swainson said on a conference call with reporters on Monday.
The Dell-Quest combination willaccelerate Dell's software efforts to develop products that are greater than "the sum of its parts," Swainson said, adding that these offerings would allow enterprises to manage increasingly complex IT environments.
For many of Dell's customers, finding dependable and comprehensive security is a primary concern, especially as they consolidate applications on cloud platforms, according to Swainson. Dell already has a strong security focus with SonicWALL and SecureWorks, and Quest's security and data protection technologies would just enhance the existing assets, Swainson said. The Quest One Identity and Access Management products allow enterprises to protect multiple cloud applications with a single sign-on platform.
For Dell, Quest's identity access management and application performance management products are "particularly important" as the company builds up its software portfolio, Swainson said during the question-and-answer portion of the call.
Enterprises need a way to maintain the security of their applications in the cloud, which is "one of the reasons we like [identity management] so much," Swainson said. The customers also need tools that provide feedback on how the applications are performing at all times, he said.
He said the market is currently driven by three key trends: the exponential growth of data, increased use of cloud computing and the growing number of consumer devices in the enterprise. Organizations need to be able to ensure that users can connect to all the applications, regardless of the device, and still be secure, he said.
These trends post "significant problems" for customers and "significant opportunities" for Dell, Swainson said.
Quest's software portfolio is "highly complementary" to Dell's vision for developing products and services that allow enterprises to secure and manage heterogeneous networks using technologies that scale with customer needs, Dave Johnson, senior vice president of Dell Corporate Strategy, said on the call.
Founded in 1987, Quest is headquartered in Aliso Viejo, Calif., and has 3,850 employees, predominantly in sales and research and development, according to Johnson. With more than 100,000 customers around the word, the company had $857 million in global revenue in 2011.