Quest Software – QSFT – Amended its previously announced merger agreement with affiliates of Insight Venture Partners

Quest Software, Inc. (NASDAQ: QSFT) announced that it has entered into an amendment to its previously announced merger agreement with affiliates of Insight Venture Partners to provide for the addition of Vector Capital as a member of the buyout group and for an increase in the merger consideration to be received by stockholders not affiliated with the buyout group from $23 per share in cash to $25.75 per share in cash.  The increased purchase price represents a 33-percent premium to Quest’s closing stock price on the day prior to the announcement of the Insight Merger Agreement.

In connection with the increased purchase price, Quest has agreed in the Amended Agreement to increase the termination fee payable by the Company under certain circumstances, including in the event that the Company receives and accepts a proposal that the Company’s Board of Directors determines to be superior to the Amended Agreement, from $6.3 million to $25 million, as well as an increase in the maximum amount of expense reimbursement payable by the Company under certain circumstances from $7 million to $12 million.

Following the unanimous recommendation of the special committee of independent directors established by the Board (the “Special Committee”), the Board, with the exception of Vinny Smith who recused himself from the vote, approved the Amended Agreement.  In making its recommendation, the Special Committee consulted with its independent financial advisors and outside legal counsel. In connection with the Board’s approval of the Amended Agreement with Insight and Vector for a purchase price of $25.75 per share, and upon the recommendation of the Special Committee, the Board also determined that the previously announced proposal for $25.50 per share submitted by a strategic bidder no longer constituted a “Superior Proposal” as defined in the Insight Merger Agreement.

The transaction provided for in the Amended Agreement will be financed through a combination of a $187 million equity commitment from Insight, a $187 million equity commitment from Vector, a rollover of at least 84% of Vinny Smith’s existing shares and approximately $1.2 billion of debt financing commitments from J.P. Morgan Chase Bank N.A., RBC Capital Markets and Barclays Capital.

About Quest

Established in 1987, Quest (QSFT) provides simple and innovative IT management solutions that enable more than 100,000 global customers to save time and money across physical and virtual environments. Quest products solve complex IT challenges ranging from database management, data protection, identity and access management, monitoring, user workspace management to Windows management.

About Insight Venture Partners

Insight Venture Partners is a leading private equity and venture capital firm focused on the global software, infrastructure software, Internet and data-services industries.

About Vector Capital

With over $2 billion of capital, Vector Capital is a leading global private equity firm specializing in buyouts, spinouts and recapitalizations of established technology businesses.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.