[Techtaffy Newsdesk]

Insight Venture Partners is taking Quest Software private in a $2 billion deal. Stockholders not affiliated with the buyout group would receive $23.00 per share in cash. The shares of chairman and CEO Vinny Smith, who will continue to lead the Company after the closing of the proposed transaction, will be “rolled over” into the surviving privately owned entity. The purchase price represents a 19-percent premium to the closing price on March 8, 2012.

Upon the closing of the deal, Quest expects to become a privately held company and plans to maintain its headquarters in California.

Vinny Smith (CEO, Quest Software): As a private company, we will have increased flexibility to drive innovation across our product lines and execute our long-term strategy. We expect this strategic partnership with Insight, with whom we have worked for many years, will ensure the Company has a secure foundation and a commitment to investment in the Company’s long-term growth.

The agreement also calls for the Company to pay a break-up fee to Insight of $4.2 million for termination of the merger agreement during the go-shop period in connection with a superior proposal. After the end of the go-shop period, the break-up fee for superior proposals is $6.3 million.

Closing of the transaction is subject to the affirmative vote in favor of the transaction of holders of a majority of the company’s outstanding shares, which will be sought at a special meeting of the stockholders.

The transaction will be financed through a combination of a $210-million equity commitment from Insight, a rollover of Vinny Smith’s existing shares and $1.195 billion of debt financing commitments from J.P. Morgan Chase Bank, RBC Capital Markets and Barclays Capital. RBC Capital Markets and Barclays Capital also acted as financial advisors.

Morgan Stanley acted as financial advisor to the Special Committee and provided a fairness opinion in connection with the transaction. Potter Anderson & Corroon acted as legal counsel to the Special Committee in connection with the transaction. Willkie Farr & Gallagher served as legal counsel to Insight in connection with the transaction. Cadwalader, Wickersham & Taft served as legal counsel to Mr. Smith in connection with the transaction. Latham & Watkins served as legal counsel to the company in connection with the transaction.