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The already-delayed $7.8 billion buyout of Alliance Data Systems Corp. by The Blackstone Group may not be take place as planned, according to a January 28 announcement that indicated the deal may be the latest victim of the turmoil in the credit markets.
An Alliance
Data press release said Alliance was told on January 25 that Blackstone does not
anticipate satisfying a condition laid down by banking regulators requiring a change in control of an Alliance-owned bank. Alliance Data
owns World Financial Network National Bank. The company also owns a
Utah-chartered industrial bank, World Financial Capital Bank, which is regulated
by the Federal Deposit Insurance Corp. Collectively the two banks issue more
than 100 million private-label credit cards for about 85 retailers.
According to
the release, Blackstone says the OCC is has demanded "extraordinary measures” on the part of Alliance and various Blackstone entities, changes Blackstone isn't willing to make. The company said it believes that further talks with OCC are futile, but doesn't list the issues in dispute.
Alliance says it “strongly disagrees” with
Blackstone’s position that the OCC’s proposal to Blackstone’s
lawyers are the agency’s “final position” about the required approvals.
The company also took issue with Blackstone’s dire characterization of the OCC’s conditions.
By invoking federal regulators to halt the deal, Blackstone may be disguising the underlying cause of its new aversion to buying Alliance, which may stem from the fact that financing is getting more difficult to obtain. Blaming regulators may also help Blackstone escape payment of a $170 million termination fee if the deal
falls through.
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