Blackstone to get minority of JDA Software with $570 mln investment

Blackstone Group and New Mountain Capital agreed to invest $570 million of equity in JDA Software Group Inc, the U.S. supply-chain-management company that has been up for sale.

JDA did not disclose how the $570 million was split between the two firms.

New Mountain, which acquired JDA in 2012 for $1.9 billion, already holds a majority of JDA and is increasing its investment, the software firm’s chief executive, Baljit Dail, said on a conference call. The investment is expected to close by the fourth quarter.

Dail declined to comment on the structure of the investment. Blackstone will receive a 40 percent stake in JDA, while the $570 million investment reduces the company’s debt by $500 million, the Wall Street Journal said. The deal will cut JDA’s interest payments by $70 million and the company will have no maturities “coming due until 2023,” Dail said.

“I’m not surprised that both firms decided to invest in JDA,” he said.

JDA, Scottsdale, Arizona, has more than 4,000 customers. The company generates $1 billion in revenue, the WSJ said.

JDA has been struggling with a $2 billion debt load. In March, Moody’s Investors Service downgraded the corporate family rating of JDA’s parent, RP Crown Parent LLC, to Caa1 from B3. The credit-rating firm said JDA’s debt levels “may be unsustainable.” Moody’s defines Caa debt as “speculative of poor standing” and subject to very high credit risk.

Reuters reported earlier this month that Honeywell International Inc has been in talks to buy JDA in a deal valued at around $3 billion. The WSJ said New Mountain had explored selling the company to private equity firms, including Blackstone, Carlyle Group and KKR, which passed on buying the company.

Dail, who declined to comment on talks with Honeywell, said JDA had a “number of discussions with many different firms.”

“Blackstone-New Mountain is the best outcome,” he said.

With the investment from Blackstone and New Mountain, JDA’s discussions to sell itself are off, a source familiar with the transaction said. New Mountain will now be able to invest more heavily in R&D, the person said.

New Mountain, a generalist investor, used its third fund to buy JDA in 2012. The transaction included about $367 million of new equity plus $330 million cash from JDA’s balance sheet, Moody’s said at the time.

New Mountain Fund III collected $5.1 billion in 2008. The PE firm closed its fourth fund at $4.13 billion in 2014.

Bank of America Merrill Lynch, Credit Suisse and Goldman Sachs advised Blackstone on the transaction. JPMorgan Chase and Seth Bernstein SMB Capital provided financial advice to JDA.

Blackstone could not be reached for comment.

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