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Honeywell Could Be Buying This U.S. Software Company for $3 Billion

August 8, 2016, 8:09 PM UTC
A visitor takes a closer look at a Honey
Singapore, SINGAPORE: A visitor takes a closer look at a Honeywell aircraft engine model displayed at the Asian Aerospace 2006 show in Singapore, 22 February 2006. Honeywell has been chosen by Europe's Airbus to supply power units for new long-range widebody A350 aircraft in a deal worth as much as four billion USD, the US conglomerate said in a statement received 22 February. AFP PHOTO/ ROSLAN RAHMAN (Photo credit should read ROSLAN RAHMAN/AFP/Getty Images)
Photograph by Roslan Rahman — AFP/Getty Images

Honeywell International is in talks to acquire JDA Software, in a deal that could value the U.S. supply chain management software company at around $3 billion, including debt, according to people familiar with the matter.

The acquisition would illustrate how Honeywell (HON), a U.S. diversified industrial conglomerate, is keen to boost its automation portfolio after it agreed last month to acquire Intelligrated, a U.S. distribution systems and logistics company, for $1.5 billion.

JDA Software’s majority owner, buyout firm New Mountain Capital, has already explored a sale of the company to private equity firms, and there is no certainty its latest talks with Honeywell will result in a deal, the people said on Monday.

The sources asked not to be identified because the negotiations are confidential. Honeywell, New Mountain Capital, and JDA Software declined to comment.

JDA Software, based in Scottsdale, Ariz., provides retail and supply chain planning and execution solutions for more than 4,000 corporate customers worldwide.

The company has been struggling under the burden of more than $2 billion in debt. Earlier this year, credit ratings agency Moody’s Investors Service warned that JDA Software’s debt levels might be unsustainable and that the risk of impairment in its capital structure would be high without a sizable equity infusion or reduction in debt.

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Exacerbating JDA Software’s woes has been fierce competition among software vendors for products in supply chain planning, transportation, and warehouse management.

Honeywell, on the other hand, has been looking to beef up its sensing and productivity solutions division, as the rise of Internet shopping fuels demand for warehouses and logistics that speed up delivery and lower costs.

New Mountain took JDA Software private in 2012 for $1.9 billion and then merged it with a company called RedPrairie.