JDA Software Chooses Blackstone Investment Over Selling Itself To Honeywell

JDA Software Group has opted to accept a $570 million equity investment from Blackstone Group LP (NYSE: BX) and New Mountain Capital over selling itself to Honeywell International Inc. (NYSE: HON).

A Wall Street Journal report said Honeywell was close to acquiring struggling supply chain software provider JDA Software for $3 billion a deal that would have boosted Honeywell's software portfolio and complemented its acquisition of Intelligrated for $1.5 billion last month.

"Honeywell has been gradually shifting into software, much like rival General Electric Company (NYSE: GE), as they both release new software integrated versions of traditional equipment. This connected equipment will enable manufacturers to collect data and better service their products, driving more long-term service revenue from customers," BTIG analyst Joel Fishbein wrote in a note.

According to a press release from JDA, the new capital will be used to fund its product innovation and growth plans.

New Mountain Capital, which has been JDA's majority shareholder since JDA's merger with RedPrairie in 2012, will be investing in the equity alongside Blackstone, and will remain as the company's majority shareholder post-investment.

The new equity investment, which will have no cash interest costs, is expected to be completed by early fourth quarter 2016, pending customary closing conditions. In addition, the funds will be used to retire existing debt and reduce JDA's interest expense by $70 million per year.

The company added that the remaining debt will have no operating covenants and the first maturity will not be until the end of 2023.

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