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Dell completes £1.5 billion deal for Quest Software

Dell has announced that it will buy IT management software company Quest Software for over £1.5 million ($2.4 billion).

Dell said it will use Quest to expand its "software capabilities in systems management, security, data protection and workspace management." Under the deal, Texas-based Dell will pay $28 (around £15) per share for Quest after a long bidding war for the company. The transaction is expected to close in Dell's fiscal third quarter, the companies said in a joint statement.

"Quest will enable Dell to deliver more competitive server, storage, networking and end user computing solutions and services to customers," John Swainson, president of Dell's software group, said in a statement. "Quest's suite of industry-leading software products, highly-talented team members and unique intellectual property will position us well in the largest and fastest growing areas of the software industry."

The deal "significantly expands Dell's footprint in the software market and adds a richer margin piece of business to the company's portfolio," analyst Brian White with Topeka Capital Markets wrote in a note to clients on Monday. Dell has made a number of acquisitions in recent years in an effort to diversify its offerings beyond just personal computers, and this latest buy is part of that strategy.

Quest, established in 1987, makes software to help companies manage their computer systems. Its products include tools for database management, data protection, identity and access management, monitoring, user workspace management to Windows management. The company has more than 100,000 global customers.

The acquisition ends a bidding contest for California-based Quest. The company in March agreed to a deal with Insight Venture Partners, a private equity firm, for $23 a share (£14.65), or about $2 billion (£1.25 billion) total. Then last week, Quest said it had received an offer for $27.50 (£17.50) a share, or about $2.32 billion (£1.48 billion), from an unidentified company, which was said to be Dell.

"With this transaction, Quest's products and employees become the foundation for Dell's critical software business," Vinny Smith, chairman and CEO of Quest Software, said in a statement.