RedPrairie Makes A Land Grab, Spends $2 Billion On SCM Rival JDA Software

| About: JDA Software (JDAS)

By Brenon Daly

Not only did RedPrairie not make it public, but now the supply chain management vendor is erasing a fairly big name from the market. The private equity-backed consolidator, which filed for an IPO three years ago, said Thursday that it is paying roughly $2 billion for rival JDA Software (NASDAQ:JDAS). It would be about the third-largest software deal of 2012, according to the 451 M&A KnowledgeBase.

RedPrairie had the misfortune to put in its IPO paperwork right as the world’s economy slid into the worst recession in a generation. That showed up in the company’s financials, with overall revenue declining 12% in the first three quarters of 2009, according to its SEC filing. On the other side, RedPrairie put up roughly $15 million in "adjusted" EBITDA each quarter, so it wasn’t too surprising when it got flipped from buyout shop Francisco Partners to fellow buyout shop New Mountain Capital rather than go public.

Since New Mountain picked up RedPrairie two and a half years ago, it has rolled up a half-dozen other companies. JDA Software is, by far, the largest acquisition. Under terms, New Mountain will hand over $45 for each share of JDA Software. That’s the highest-ever price for the company and about five times the split-adjusted price at which it first sold shares to the public, back in 1996.

The transaction, which is expected to close before the end of the year, values JDA Software at nearly three times sales and roughly 16 times trailing EBITDA (at least according to JDA Software's calculation of $122 million in EBITDA, on an unadjusted basis for Q3 2011 through Q3 2012). As a comparison, we understand that RedPrairie traded at closer to two times sales and about nine times EBITDA back in February 2010, although terms weren't officially released.