Honeywell Nears $3 Billion Deal to Buy JDA Software
August 14 2016 - 10:50PM
Dow Jones News
Honeywell International Inc. is nearing a deal to acquire JDA
Software Group Inc., a maker of software that helps businesses
manage their supply chains, according to a person familiar with the
matter.
The deal would value closely held JDA at around $3 billion,
including debt, and is expected to be announced as soon as Monday,
this person said. Reuters previously reported that Honeywell was in
talks to buy JDA.
Spokespeople for Honeywell and JDA declined to comment.
The acquisition would boost Honeywell's shift into software. The
industrial conglomerate's chief executive, David Cote, says about
half of the New Jersey-based company's 23,000 engineers are now
working on software, as opposed to the heavy goods like jet engines
and building control systems for which the company is best
known.
Scottsdale, Ariz.-based JDA sells software that helps hundreds
of retailers such as Walgreens and Advance Auto Parts optimize
their supply chains and merchandising. It also provides warehouse
management software to manufacturers and consumer products
companies. The company, which was founded in 1985, has more than
4,300 employees, according to its website.
JDA's majority owner is buyout firm New Mountain Capital, which
took the software maker private for $1.9 billion in 2012 and merged
it with software rival, RedPrairie. In March, Moody's downgraded
its ratings on more than $2 billion of JDA debt, citing a risk of
impairment without an equity infusion or reduction in debt.
Honeywell, like rival General Electric Co., is betting that
software layered atop heavy machinery will help lock in long term
service revenue from its customers. Honeywell is rolling out newly
connected versions of equipment from its traditional business
lines—like aviation power generators—to convince customers that it
can better service the machines in part by harvesting data.
In July, Honeywell said it would pay $1.5 billion to purchase
Intelligrated, a privately held maker of automation systems for
warehouses and supply chains.
The JDA acquisition will bolster the building side of
Honeywell's business, which makes gas detection monitors and
thermostats. Included in that portfolio is a suite of small
computer products like those used by package delivery workers, and
JDA software could eventually help guide consumer goods from
factories to the cash register.
Write to Ted Mann at ted.mann@wsj.com
(END) Dow Jones Newswires
August 14, 2016 22:35 ET (02:35 GMT)
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