Quest Software said Friday that it's being bought by investment firm Insight Venture Partners for $23 per share, which the company says values it at $2 billion.
Shares of Quest, which helps companies manage databases and provides other corporate IT services, are up 24 percent, or $4.57, to $23.97 in afternoon trading.
Insight is putting up $210 million and borrowing $1.2 billion to pay for the shares outstanding, not including CEO Vinny Smith's 34 percent stake. Smith is keeping his stake, which will be rolled over into the private company, and will remain as CEO. He owns 28.3 million shares, which are worth about $549 million, according to FactSet.
Smith became CEO of the Aliso Viejo, Calif., company last month after Doug Garn left Quest because of unspecified health issues.
Other senior management is also staying on board, Quest said Friday.
The $23 per share price is a 19 percent premium to the company's closing stock price Thursday.
Quest will have 60 days to solicit and review bids from other potential buyers. There's a break-up fee of $4.2 million if Quest ends its agreement with Insight in favor of a better offer. The break-up fee will rise to $6.3 million if Quest agrees to a higher bid after the 60-day period.
The company's board voted in favor of the deal. Smith, who is also chairman, recused himself from the vote. A majority of stockholders must approve the deal. Smith has already agreed to vote his shares.
The buyout is expected to close in the third quarter.
Quests plans to keep its headquarters in Aliso Viejo after the transaction is complete.