Return to search

Blackstone to fight Alliance Data lawsuit

The credit-card services company is pursuing a $170m break-up fee for the second time, as the mega-buyout firm calls the suit ‘just as spurious as the first one’.

The Blackstone Group has said it will not settle a $170 million (€107 million) lawsuit from Alliance Data Systems, filed after their previously agreed $7.8 billion deal failed to complete by its Friday deadline. It’s the second such lawsuit the credit card services company has filed.

“We are disappointed that Blackstone’s affiliates chose not to satisfy their obligations to consummate this transaction,” ADS chairman Robert Minicucci said in a statement.

Blackstone called the suit “just as spurious as the first one” in a statement that maintains the firm did everything in its power to complete the deal struck last May.

“We have fully complied with all of our obligations under the merger agreement and any claims to the contrary by Alliance Data are purely self-serving. Blackstone will defend this suit vigorously and does not intend to settle it,” Blackstone said.

Similar to the previous lawsuit the company filed and later dropped, the latest suit alleges that Blackstone refused to accept reasonable and customary regulatory requirements and prolonged negotiations with the Office of the Comptroller of Currency.

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”. Alliance Data said previously that it was unable to agree with Blackstone on alternative solutions that would please the regulator.

Blackstone declined to comment.

ADS represents just one of several high-profile deals Blackstone has failed to complete in recent months. In January, Blackstone was forced to scrap a $1.8 billion buyout of PHH, a mortgage and leasing group, after failing to secure adequate financing.  

That same month GSO Capital Partners, a recently acquired Blackstone affiliate, paid a $21 million breakup fee after walking away from a $1.1 billion deal for packaged ice distributor Reddy Ice.