Dell Inc, the world's third-largest PC maker, is in talks to buy network security firm Quest Software Inc, Bloomberg yesterday reported, citing sources.

In March, Quest had agreed to be bought out by New York-based private equity and venture capital firm Insight Venture Partners for $23 per share or $2 billion, (See: Insight Venture to acquire Quest Software for $2 bn),  when Dell was among the bidders for the Aliso Viejo, California-based company. 

The deal included a 60-day "go-shop" provision for Quest to solicit alternative proposals and a break-up fee of $4.2 million during the 60 days and $6.3 million after the go-shop period ended.

In early May, Quest announced that it had received multiple alternative proposals during the go-shop period. "The alternative proposals are reasonably expected to lead to a superior proposal," the company said in a statement. (See: Quest Software receives multiple proposals from suitors)

Founded in 1987, Quest Software provides innovative IT management solutions like database management, data protection, identity and access management, monitoring, user workspace management to Windows management.

The company, which had a market value of $2.12 billion at yesterday's close, claims to have more than 100,000 customers worldwide, of which, 87 per cent are from among the Fortune 500.

With more than 60 offices in 23 countries, Quest Software generated revenues of $857 million in 2011 and invested 18.9 per cent of that on R&D.

JPMorgan Chase & Co. said Quest is worth about $28 per share, based on the software provider's sales and cash flows, and could attract bids from IBM Corp or private equity firms, Bloomberg reported.

After reporting 13 per cent rise in revenues in the first quarter, Quest may report sales rise of 11 per cent in the second quarter, according to analysts' estimates compiled by Bloomberg.

Round Rock, Texas-based Dell has made five acquisitions this year, including Wyse Technology and SonicWall, and more than $8 billion in the past five years, including Perot Systems for $3.9 billion, EqualLogic for $1.4 billion and Compellent Technologies for $960 million.

Dell had posted net profit of $3.5 billion on revenues of $62.1 billion in 2011 and had $13.7 billion in cash and short-term investments at the end of the fiscal first quarter.