A bidding war may be erupting over Quest Software Inc., an Aliso Viejo company that makes software for businesses, organizations and governments.
In a filing with regulators Thursday, Quest said it has received an offer for the company that is higher than a previous bid of $2 billion from New York investment group Insight Venture Partners.
Quest declined to identify the latest bidder but said that it was proposing to pay $25.50 a share, or $2.17 billion. Insight is offering $23 a share, or about $2 billion.
Quest shares rose $2.20, or 9.2%, to $26.06 on Thursday.
The company described the new suitor as a "strategic bidder," meaning that the new buyer is probably another software or computer company such as Dell Inc., analysts said.
"If you asked me to bet on it, I'd say it's 50-50 odds that Dell is the strategic bidder," said Brian Freed, and analyst for Wunderlich Securities. "Dell is the most logical fit because they can leverage every element of Quest's portfolio."
Freed said Insight is mainly interested in the financial value of the company, while the new bidder may view Quest as fitting well with its operations.
"There just doesn't seem to be anybody else who wants everything Quest has," Freed said. "I think this is likely the last bid."
Quest initially agreed in March to a deal with Insight that some analysts believed undervalued the company.
"It's a very healthy cash-flow company," said Aaron Schwartz, an equity analyst for Jefferies & Co.
Last year Quest posted earnings of $44 million on sales of $858 million.
Under the initial merger agreement, Insight has three days to make a counteroffer.
Quest, a 25-year-old firm with 3,850 employees, sells enterprise software, information technology management solutions and related services. Its clients include Papa John's, Darigold, Amway, San Bernardino County and the University of Massachusetts Medical School.
Under the terms of the Insight bid, Quest Chairman and Chief Executive Vinny Smith would continue to lead the company, and the existing senior management team would remain in place. The company did not disclose what would happen to the executives under the higher offer.