Quest Software, Inc. (Nasdaq: QSFT) today announced its intent to commence a modified “Dutch Auction” tender offer for up to 10,715,000 common shares or approximately 11.3% of its common shares outstanding. The purchase price will not be greater than $14.00 or less than $12.50 per share for a maximum aggregate purchase price of approximately $150 million. On May 29, 2009, the closing sale price on the NASDAQ Stock Market for Quest’s common stock was $12.92. The tender offer is expected to commence on or about June 2, 2009 and will remain open for at least 20 business days. Quest intends to fund this share repurchase using its available cash resources and available borrowings under its $100 million revolving credit facility. As of March 31, 2009, Quest had approximately $310.6 million in cash and cash equivalents, restricted cash and short-term and long-term investments, and no outstanding balance under its revolving credit facility. The offer will be subject to terms and conditions to be described in an offer to purchase to be filed with the Securities and Exchange Commission on the date the tender offer is commenced.
The repurchase will be made through a modified "Dutch Auction" tender offer in which stockholders will be given the opportunity to sell a portion or all of their shares to Quest and do so without incurring any brokerage fees or commissions.
Under the modified “Dutch Auction” format, Quest will select the lowest price within the stated range that will allow it to buy 10,715,000 shares of its common stock, assuming that a sufficient number of shares is tendered. If the number of shares tendered is greater than the number sought, purchases will be made on a pro rata basis from stockholders tendering at or below the purchase price. The actual purchase price will be determined through an auction mechanism and will be the single lowest price within the offer range at which Quest can purchase up to 10,715,000 shares of common stock. The offer is not conditioned on the receipt of outside financing or upon any minimum number of shares being tendered. Quest’s board of directors and its executive officers do not intend to participate in the tender offer.
Quest’s Executive Chairman, Vincent C. Smith, has entered into a Voting Agreement with Quest pursuant to which he has agreed to vote any shares of Quest voting securities held by him, subject to certain exclusions, that represent greater than 35% of Quest’s outstanding voting securities in the same proportion as all shares of Quest voting securities are voted, including by Mr. Smith and his affiliates, on any matter presented to Quest’s stockholders, subject to certain exceptions. If the tender offer is subscribed in full, the voting securities held by Mr. Smith will increase from approximately 30.4% of Quest’s outstanding voting securities as of May 26, 2009 to approximately 34.3% immediately after consummation of the tender offer.
MacKenzie Partners, Inc. will act as the information agent for the tender offer. The depositary will be Computershare Trust Company, N.A. Neither Quest, its board of directors, the information agent nor the depositary is making any recommendation to stockholders as to whether to participate in the tender offer.