Alliance Data abandons Blackstone lawsuit

Alliance Data Systems has dropped its case against Blackstone less than two weeks after suing the private equity firm to force an agreed $7.8 billion buyout.

The Blackstone Group is “gratified” that Alliance Data has discontinued legal action it commenced late last month to force the $7.8 billion leveraged buyout it agreed in June 2007.

We remain committed to finding a way to consummate a transaction.


The Texas-based provider of transaction, credit, and marketing services said it dismissed the lawsuit “with prejudice”, meaning it is not prevented from filing the same claims in a new lawsuit, because Blackstone court filings and correspondence with regulators indicated it was still committed to closing the deal.

“We are gratified that ADS has dropped its lawsuit so soon after it was filed,” Blackstone said. “We said at the outset that it was utterly without merit. Blackstone’s position has not changed at all. As we have consistently said since we received the notice from the [Office of the Comptroller]: we remain committed to finding a way to consummate a transaction.”

Blackstone had previously indicated it could back away from the deal due to OCC regulatory requirements that it deemed, “unprecedented and unacceptable financial and operational requirements that would impose an unlimited and indefinite liability on Blackstone and its funds”.

ADS said it has “identified various potential solutions to OCC-related issues that Blackstone has said are impediments to completing the merger”, and noted that while it looks forward to working with the firm on a solution, there is no guarantee the deal will close.

The agreement includes a break-up fee and reverse break-up fee, each is $170 million.