Alliance Data accuses Blackstone of breaching agreement, demands completion of acquisition

By Lisa Kerner

Charlotte, N.C., March 17 - Alliance Data Systems Corp. notified Blackstone Group's affiliates that they are in breach of the May 17, 2007 merger agreement and called on the private equity firm to complete the transaction.

Blackstone formed Aladdin Solutions, Inc. and Aladdin Merger Sub, Inc. for the purposes of acquiring Alliance Data.

Alliance Data demanded that the affiliates cure the breaches and consummate the transaction, according to a company news release.

Blackstone agreed to acquire Alliance Data for about $7.8 billion, including debt, or $81.75 cash per share, the companies announced in May.

Robert A. Minicucci, chairman of the special committee of Alliance Data's board said the terms of the agreement are clear.

"Blackstone and its affiliates continue to refuse to meet reasonable and customary regulatory requirements as an excuse to avoid completing the transaction," Minicucci said in the release.

Alliance Data also accused Blackstone, Aladdin Solutions and Aladdin Merger Sub of prolonging negotiations with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp., refusing to accept customary requirements related to the "source of strength" provision.

On Feb. 8, Alliance Data announced it had dismissed without prejudice its lawsuit against Blackstone and its affiliates, filed to compel Blackstone to comply with its obligations under the merger agreement.

Alliance Data identified various potential solutions to approval-related issues that Blackstone considers impediments to completing the merger, prompting the lawsuit's dismissal, it was previously reported.

On Jan. 25, Blackstone notified Alliance Data that it did not believe approval from the OCC would be obtained and that it was unwilling to satisfy the regulatory agency's requirements. The approval is a condition of the merger.

However, Alliance Data believed the OCC's requests were reasonable and that Blackstone could satisfy the requirements.

Dallas-based Alliance Data provides marketing, loyalty and transaction services.

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