Alliance Data Systems Corp. (NYSE: ADS) shareholders are not going to be too happy this morning with shares trading down close to 40% in pre-market trading.
The Blackstone Group (NYSE: BX) led-buyout group sent notice to Alliance Data that they do not anticipate the condition to closing the merger relating to obtaining approvals from the Office of the Comptroller of the Currency will be satisfied. If you look at Alliance's reaction, it is probably safe to assume that another busted merger lawsuit is about to be filed.
In the press release Alliance Data said it "strongly disagrees with Blackstone's stated assertions that (i) the OCC's most recent written proposal to Blackstone's counsel embodied the OCC's "final position" with respect to the terms on which the required approvals would be granted and (ii) the OCC is "demanding that extraordinary measures be taken by ADS and various Blackstone entities in connection with the Change in Control Notice" that "represent operational and financial burdens on ADS, Blackstone and it affiliates that cannot be reasonably assumed."
It also believes that Blackstone has the ability to cause the condition to closing cited in Blackstone's letter to be satisfied. Alliance also noted that Blackstone's notice did not assert any breach of the merger agreement by Alliance Data or the occurrence or anticipated occurrence of any material adverse effect.
Alliance Data Systems shares closed at $65.60 Friday, and the 52-week trading was $47.49 to $80.79. Shares are trading down 43% at $37.10 in pre-market. How ugly are blown-up private equity mergers.
Jon Ogg is a partner and editor of 247WallSt.com.
Alliance Data Systems merger looks like toast
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