Shares of Dell Inc. were down on Monday after the announcement of plan for buying Quest Software in a deal worth $2.4 billion.
The stocks of Dell were trading down by 1.2 per cent to $12.36 in the early trading session. Stocks of Quest were also marginally off at $2.75. Dell, the Round Rock, Texas based firm, declared today that it will be buying the stock of Quest for $28 per share which amounts to a total of $2.4 billion. This is a premium of 19 cents over Quest’s previous closing price of $27.81 per share on Friday.
Quest had announced last week that it received a buyout proposal for $27.5 a share. The president of Dell Group, John Sawinson, in his statement said that the acquisition will enable them in delivering more competitive server, networking, storage and end user computing solutions and services for its target customers. Dell Inc. is looking to transform itself from being a personal computer powerhouse into a major market player in the much lucrative corporate IT market.
The deal will effectively increase the footprint of Dell in the software market and add a richer margin piece to its portfolio, according to the market analysts. The theme that is marking the investment policy of Dell is the migration into the higher margin, enterprise services and products focusing on the next generation data centers which will pave a way for it into the Cloud.
Cloud computing refers to the current trend in the corporate information technology business where the firms will be accessing the computing capacity through a network as compared to the setting up of their own data centers.
Dell is trying to expand itself in this market through the acquisition of major players in the services of data center and iT, including the likes of Force 10 Networks and Perot Systems.