Why Quest Software's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Quest Software (NAS: QSFT) jumped 10% today after it announced it had received a higher buyout offer than a previous one.

So what: Management said it had received a $2.15 billion bid from an undisclosed strategic bidder that would pay shareholders $25.50 per share. A previous offer of $23 per share, or $2 billion total, from Insight Venture Partners was topped during a "go-shop" period in which the company could solicit other offers.

Now what: Shares are already trading over $26, indicating the market thinks a bidding war will erupt. Considering this is the offer the company announced, I don't see another outside offer topping this one, but Insight Venture Partners may up its bid. I still think that's a risky bet and would cash my chips in right now at a price above what is currently on the table in a buyout.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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