Blackstone to buy Alliance Data for $7.8bn

Activity in the electronic payment space continues with the Blackstone Group’s agreement to buy Dallas, Texas-based Alliance Data, a provider of transaction, credit, and marketing services, in a deal valued at $7.8 billion.

Alliance Data Systems will be taken private by The Blackstone Group in a transaction valued at $7.8 billion (€5.8 billion), including the assumption of debt. Based in Dallas, Texas, Alliance Data has more than 9,000 employees at 60-plus locations worldwide. It provides transaction, credit and marketing services to the retail, petroleum, utility, financial services and hospitality markets.

Blackstone has agreed to pay $81.75 per share in cash for the publicly traded company. The price represents a premium of approximately 30 percent over Alliance Data’s closing share price of $62.96 on 16 May.

Blackstone senior managing director Chip Schorr led the deal, which is expected to close by the end of 2007. It is subject to shareholder, antitrust and regulatory approvals, as well as customary closing conditions.

Banc of America and Lehman Brothers provided financial counsel to Alliance Data and the special committee of the Alliance Data board reviewing the transaction, while Evercore also advised the special committee. Kirkland & Ellis provided legal counsel to the special committee and Akin Gump Strauss Hauer & Feld provided legal counsel to Alliance Data.

Credit Suisse and Blackstone Corporate Advisory Services provided financial counsel to Blackstone, and Simpson Thacher & Bartlett provided its legal counsel.

Electronic payment-related companies have been snapped up recently by private equity firms. Last month, Kohlberg Kravis Roberts agreed to buy First Data for $29 billion in one of the largest ever buyouts, Warburg Pincus announced the acquisition of Megavante for $625 million, and General Atlantic bought a minority stake in the Global Electronic Trading Company for an undisclosed amount.

Blackstone’s investment in Alliance Data Systems is being made from the firm’s fifth private equity fund, Blackstone Capital Partners V, which raised more than $18.1 billion last year and is expected to surpass the $20 billion mark upon final closing.