Blackstone (BX), New Mountain Make $570M Equity Investment in JDA Software Group
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JDA Software Group, Inc. announced that it has completed an agreement with funds managed by Blackstone (NYSE: BX) and New Mountain Capital (NMC) to effect a recapitalization of the company through a $570 million equity investment. The new capital will be used to fuel JDA’s product innovation and growth plans to deliver next generation cloud-based solutions and accelerate opportunities for current product development and enhancements. With this strategic investment, JDA will be well-positioned to continue building on its market-leading portfolio of supply chain and omni-channel retail solutions. The new equity investment is expected to be completed by early Q4 2016, pending customary closing conditions.
“This is a very exciting day for JDA and a testament to the terrific work of our associates and our 4,000 loyal global customers,” said Bal Dail, Chairman and Chief Executive Officer, JDA. “This investment will accelerate our future growth plans and vision for the business. It not only reaffirms our vision, financial performance, and innovation track record, but also our reputation as the market leader in our space and our unique ability to enable customers to capture opportunities presented by today’s digital transformation. This investment will accelerate the development of our SaaS-based solutions and allow us to develop innovative new solutions on Google Cloud Platform while enhancing our current large R&D investment in our existing products. No one spends more on supply chain-focused R&D than JDA, and we look forward to continuing to innovate for customers through our JDA Labs and our best-in-class product development teams.”
Strengthened Capital Structure to Help Drive Strategic Growth
The new equity investment will have no cash interest costs for JDA and will be used to retire existing debt and reduce JDA’s interest expense by $70 million per year. The remaining debt will have no operating covenants and the first maturity will not be until the end of 2023. NMC, which has been the company’s majority shareholder since JDA’s merger with RedPrairie in 2012, will be investing in the equity alongside Blackstone, and will remain as the company’s majority shareholder post-investment.
“We are thrilled to partner with New Mountain Capital to make this strategic investment in JDA,” said Viral Patel, Managing Director at Blackstone. “We are confident that the company is primed for accelerating growth in the years ahead.”
“Blackstone has strong expertise and history in the software space, and after lengthy due diligence, we are highly confident in the strategic direction and management at JDA,” said Martin Brand, Senior Managing Director at Blackstone. “JDA is the proven leader in supply chain software, has a strong vision for the future, and is uniquely positioned to make the strategic investments that will expand its technological and market share leadership in the years ahead.”
“We thank JDA’s management for the outstanding job they have done over the past two years as JDA has transformed itself and refocused its commitment to being customer-centric. We are excited to be a part of the major success that we believe JDA can achieve in the years ahead,” said Pete Masucci, Managing Director of New Mountain. “We are pleased to have Blackstone as our shareholder-partner to help us achieve these goals and we’ll work together with JDA to grow the core business, while launching new initiatives and offerings that support JDA’s long-term strategy and vision for delivering a seamless supply chain to its customers.”
Investment Fuels Future SaaS Development and Company Growth
This strategic investment will help accelerate the current growth trajectory at JDA as the company closed the first half of 2016 with its highest year-over-year growth in software revenue since NMC merged the company with RedPrairie in 2012. In the second quarter of 2016, JDA posted overall revenue growth of 7 percent versus the prior year (8% in constant currency), with software revenue growth of 62 percent and 44 percent growth in Software-as-a-Service (SaaS) revenue.
JDA counts more than 4,000 manufacturing, third-party logistics, wholesale distribution and retail customers among its global customer base including 78 of the top 100 retailers1, 78 of the top 100 consumer goods manufacturers2, 8 of the top 10 global 3PLs, and 20 of the Gartner Supply Chain Top 253 for 2016 list. JDA is also the only company named a leader in all five Gartner Magic Quadrants covering supply chain and retail merchandising solutions and is uniquely positioned to help companies capitalize on the digital transformation affecting today’s supply chain with the emergence of the Internet of Things (IoT), Big Data, and analytics. The investment from Blackstone and NMC will allow JDA to accelerate its R&D investment by building the company’s next generation of cloud-based solutions on Google Cloud Platform, JDA’s strategic cloud partner of choice.
Recent JDA Product Innovations Will Be Accelerated by Investment
Earlier this year, JDA announced the general availability of JDA Retail.me, which is the first JDA SaaS solution built on Google Cloud Platform and is a result of JDA’s strategic collaboration with Google. JDA Retail.me has reinvented retail planning from the ground up and is the first of several planned applications JDA will be introducing as part of this next generation retail planning solution. This new capital investment will help JDA accelerate research and development to continue building JDA’s next generation of cloud-based solutions.
JDA’s future innovation is driven in large part through JDA Labs, a dedicated research and development group within JDA committed to accelerating technology innovation by identifying, developing and deploying disruptive capabilities that can transform the supply chain and retail markets. As a company, JDA holds more than 400 patents granted and pending, and has filed 28 patent applications in the last 18 months alone.
Recent product innovations and enhancements across JDA’s existing portfolio include:
- Delivering a completely reimagined user experience for warehouse management, along with comprehensive support for omni-channel fulfillment and returns management for manufacturers and retailers.
- Expanding its market-leading control tower and S&OP capabilities through multi-dimensional in-memory computing, while significantly improving planning speed through packaged SAP HANA integrations.
- Broadening capabilities for store workforce schedule management, enabling support for increasingly stringent and diverse schedule laws, as well as delivering long-range workforce planning capabilities to strategically manage human capital assets.
- Delivered comprehensive real-time visibility and predictive analytics within JDA Transportation Management across ocean, air, and ground transportation through a digital hub strategy, powered through partnerships with TransVoyant, INTTRA, and FourKites.
- Creating next generation Store Logistics solutions by leveraging JDA partner Intel’s Internet of Things (IoT) platform to provide real-time inventory tracking to reduce out-of-stocks, increase associate productivity, and deliver complete inventory visibility in-store.
In addition, JDA launched the Future Series outlining the future of supply chain management and retail operations. This series is unique in the industry and has been equally well-received by customers and industry analysts.
Bank of America Merrill Lynch, Credit Suisse, and Goldman, Sachs & Co. acted as advisors to Blackstone on the transaction.
JPMorgan Chase & Co. and Seth Bernstein SMB Capital acted as advisors to JDA on the transaction.
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