Dell (Nasdaq: DELL), the No. 3 PC maker, seeking to battle Oracle (Nasdaq: ORCL), the No. 1 database developer, may have been stymied in its efforts to acquire Quest Software (Nasdaq: QFST).
Buying Quest would further strengthen Dell's software and services tools for enterprises as it seeks to make more money on them than selling PCs and fit into CEO Michael S. Dell's strategy.
The Round Rock, Tex.-based manufacturer last week bid $25.50 a share -- or $2.15 billion -- for Aliso Viejo, Calif., developer of software tools that enable enterprises to manage themselves better, investment bankers said.
The Dell bid topped an earlier offer from Insight Venture Partners in March of $23 a share. That accorded with the desire of Quest Software CEO Vincent C. Smith to take the company private under his management.
Insight, a New York-based private equity firm, recruited Vector Capital of San Francisco, another private equity firm, to top that with a new bid of $25.75, or about $2.17 billion.
Additionally, Quest Software, which had agreed to Insight's first offer, upped the termination fee to $25 million from only $6.3 million.
Vector Thursday became the biggest shareholder of France's Technicolor (Paris: TCH) after a month-long battle with JPMorgan Chase (NYSE: JPM), the No. 1 U.S. bank. Vector has long taken stakes in technology companies either as long-term investor or to reshape it for future sale or spin-off.
Analyst Aaron Schwartz of Jefferies said he thought Dell's offer had been at the upper end, but now that the two private equity firms have joined forces, they could bid higher if necessary.
To be sure, if Dell is the primary interested strategic buyer, it could bid still more for Quest, Schwartz said.
At the close of its first quarter on May 4, Dell reported cash and investments exceeding $17.2 billion.
The protracted tussle for Quest has rewarded its shareholders. The shares closed Thursday at $26,.34, down 16 cents, but up nearly 42 percent for the year, with most of the gain since Insight made its initial bid.
Dell shares fell 32 cents to $11.98 and are down more than 18 percent in 2012 and more than 27 percent for the past 52 weeks.
Oracle shares fell 68 cents to $27.81. They're up 8 percent in 2012 but down nearly 15 percent for the past year.