ADS Deal No More?
by Mark H. Goldstein | CEO
Whoops…it appears that Blackstone has found an elegant way to retreat from their super-pricey Alliance Data deal. They are blaming the Feds!!! Loyalty Lab competes/partners with various ADS companies and we’d ideally like to see ADS remain public as it enables us to watch them far more closely given the need for public reporting. That said, I never like to see folks have their deal fall apart, so I realize this is no fun for the ADS crowd.
ADS Says Blackstone Deal Unlikely
By ANDREW EDWARDS
January 28, 2008 8:46 a.m. (Wall Street Journal)
Alliance Data Systems Corp., just two weeks after assuring investors the deal was on, said Blackstone Group L.P. likely won’t go through with its $6.4 billion acquisition because of conditions being sought on the takeover by the Office of the Comptroller of Currency, a federal banking regulator.
The news sent ADS shares plunging in remarket trading, falling to $38.40 from Friday’s closing price of $65.60. The May merger deal values each share at $81.75.
Blackstone told the data processor and marketing firm in a letter late Friday it doesn’t expect the deal to get the necessary approvals from OCC and that the regulator is demanding “extraordinary measures” which “represent operational and financial burdens … that cannot be reasonably assumed.”
Blackstone “is unwilling to satisfy” the OCC’s requirements, said ADS, and the private-equity firm believes that “alternative solutions that would be acceptable to Blackstone would not satisfy the OCC,” making negotiations with the agency “futile.”
The deal was slated to close at the end of 2007. By last week, Blackstone’s offer price represented a 40% premium on
Several buyout deals have apart as the credit market has unraveled over the past few months. Leveraged buyouts, which were on the upswing when money was cheap, have been harder to work economically as investors have become wary of buying debt financing the deals. Recent buyouts by private equity firms which failed to be completed include SLM Corp. and United Rentals Inc.’s failed deal with Cerberus Capital Management.
