Blackstone (BX -0.4%) has offered a financing plan to help JDA Software, giving it an alternative option to selling itself to Honeywell (HON -0.3%), Reuters reports.
BX reportedly has proposed to JDA a payment-in-kind financing deal whose coupon would be paid with additional securities, and would include equity warrants that would give BX a significant minority stake in the company.
JDA's majority owner, buyout firm New Mountain Capital, now must decide whether to sell the company outright to HON for ~$3B, or stick with it and seek to speed its turnaround with new capital from BX that would allow JDA to invest in its sales force and products, according to the report.
M&A activity is kicking off the headlines this week with an array of deals expected to be announced shortly.
Among them: Mid-America Apartment (NYSE:MAA)- Post Properties (NYSE:PPS), Sharp (OTCPK:SHCAY)- Foxconn (OTC:FXCOF), Honeywell (NYSE:HON)- JDA Software, Xylem (NYSE:XYL)- Sensus USA and KKR- Entertainment One (OTC:ENTMF).
The technology sector is still leading the global M&A market in 2016, but the real estate segment is not far behind.
Will 2016 outpace 2015's record in terms of acquisitions and deal value?
Honeywell's (NYSE:HON) deal for JDA Software, an acquisition that could be valued at around $3B, is expected to be announced as soon as today, WSJ reports.
The purchase would boost Honeywell's shift into software. CEO David Cote says about half of the company's 23K engineers are now working in the sector, as opposed to the heavy goods like jet engines and building control systems for which it is best known.
Engineering and construction firm KBR Inc. (NYSE:KBR) agrees to acquire Honeywell's (NYSE:HON) government services provider for ~$300M.
KBR says the acquisition expand its government service offerings into higher end technical services that carry increased margins and reduced levels of risk, while HON says the business does not fit with its current portfolio and long-term strategic plans in aerospace.
Annual estimated revenues for the Honeywell Technology Solutions unit are ~$600M.
Honeywell (NYSE:HON) is in talks to acquire JDA Software in a deal that could value the U.S. supply chain management software company at ~$3B, including debt, Reuters reports.
A deal would illustrate how HON is seeking to boost its automation portfolio after it agreed last month to acquire distribution systems and logistics company Intelligrated for $1.5B.
JDA Software is struggling with more than $2B in debt, and Moody's earlier this year warned that the company's risk of impairment in its capital structure would be high without a sizable equity infusion or reduction in debt.
Honeywell (HON +0.8%) confirms that it agreed to acquire distribution systems and logistics company Intelligrated for $1.5B from a company backed by the Permira funds.
"Intelligrated's leading supply chain automation solutions are a fantastic complement to Honeywell's portfolio of industry-leading workflow performance solutions including cloud-connected mobile worker applications, high-performance data collection hardware, and other technologies to improve worker productivity," HON says.
HON estimates Intelligrated's 2016 sales will total ~$900M.
Even though it gave a stiff-arm to a huge acquisition proposal from Honeywell (HON -0.5%), United Technologies (UTX -0.4%) says it would listen to another big merger offer.
UTX had rebuffed a reported megadeal from Honeywell, saying the regulatory issues in combining two companies each worth more than $70B (and supplying so much of each plane) would make it a nonstarter.
"I wouldn't be afraid to do a big deal," CEO Gregory Hayes said at an investor meeting today. But "it's got to be something that's actionable ... and the regulatory hurdles have to be manageable."
Without a deal, UTX is poised for "huge growth," he says, but there may be appetite in its commercial business (elevators, fire, security systems) and perhaps its aerospace systems business for a large deal.
Investing in aerospace systems and Pratt & Whitney has set up those divisions for "nearly a trillion" dollars in sales over the next 25 years, Hayes said.
"This is the appropriate outcome given the strong regulatory obstacles, negative customer reaction and the potential for a protracted review process that would have destroyed shareholder value," the company said in a statement.
"UTC will remain laser focused on our key priorities - program execution, innovation, cost reduction and disciplined capital allocation. Our outlook remains strong and our industry-leading franchises are well positioned to deliver strong earnings growth and create shareholder value well into the future."
Though strongly disagreeing with United Technologies' (NYSE:UTX) concerns about regulatory and consumer risks to the deal, Honeywell (NYSE:HON) - recognizing the target's unwillingness to engage - is dropping its merger ambitions.
According to a regulatory filing, Honeywell (HON -0.7%) CEO David Cote sold about 345K shares worth roughly $36M in company stock on Feb. 16 - three days prior to his company approaching United Technologies (UTX -0.9%) with a buyout offer.
The filing doesn't indicate whether the sale was part of a pre-arranged plan.
Honeywell's stock price sunk about 7% following the leak of its offer a few days later.
Cote has been a fairly active seller of company stock over the past year, unloading nearly 900K shares.