Honeywell Nears $3 Billion Deal to Buy JDA Software

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 [e-mail]

(END) Dow Jones Newswires

August 14, 2016 22:35 ET (02:35 GMT)

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