Alliance goes after break-up fee from Blackstone (ADS, BX)
Posted by: in Private Industry NewsFiled under: The Blackstone Group, Taxes and regulations, Private equity industry, Shareholders
The Blackstone Group, LP (NYSE: BX) has another Alliance Data Systems Corp. (NYSE: ADS) law-suit on its hands. According to the Wall Street Journal, this time the credit-card processor has accused Blackstone of breaking their agreement to buy the company for $6.4 billion and demands $170 million as a breakup fee.
This is the second time Alliance has sued Blackstone over the proposed merger. In January, they withdrew a law suit that attempted to force the completion of the merger after Blackstone assured them the deal would go through. Apparently and no one can blame them, they backed out again, prompting the latest law suit.
Blackstone said the pull out is due to a $400 million backstop stipulation imposed by the Office of the Comptroller of the Currency to support OCC regulated Alliance. Alliance alleges Blackstone failed to use “its ideal efforts” to earn OCC approval and that Alliance took many steps to solve the problem.
Blackstone maintains they didn’t breach any conditions outlined in the merger agreement and the accusations will be strongly contested. Alliance shares are down over 2% this day to $51.55 on a 52-week range of $39.54 to $80.79. The deal valued Alliance shares at $81.75. Blackstone shares are also down by 2% to $18.50 on a 52-week range of $13.40 to $38.00.
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