Yet another jilted company is suing its private equity suitor after being left at the altar.
Alliance Data Systems has filed a lawsuit against the acquisition arms of The Blackstone Group to compel the private equity firm to complete its $6.4 billion acquisition of the credit card processor.
Alliance’s suit follows similar suits by Sallie Mae and United Rentals, who also recently sued their potential acquirers the deals collapsed.
Last Friday, Blackstone told Alliance Data that approvals from the Office of the Comptroller of the Currency — one of the conditions of the acquisition — were not likely. According to Alliance, Blackstone’s sent the company a notice saying the OCC is “demanding that extraordinary measures be taken by ADS, Holdco and various Blackstone entities in connection with the Change in Control Notice [that] represent operational and financial burdens on ADS, Holdco and Blackstone that cannot be reasonably assumed.”
Alliance retorted that the OCC approvals appear unlikely only because Blackstone isn’t willing to satisfy the OCC’s requirements, and won’t negotiate with the regulator. “Blackstone also expressed its belief that alternative solutions that would be acceptable to Blackstone would not satisfy the OCC, and therefore that further negotiations with the OCC would be futile,” it added.
The lawsuit accuses Blackstone of failing to use good faith or reasonable best efforts to negotiate or otherwise attempt to reach a resolution and obtain required approvals from the OCC with respect to the change of control of World Financial Network National, Alliance Data’s bank subsidiary.
“Based on experience with similar banks, the OCC has asked that safeguards be put into place to assure the safe ongoing operation of WFNNB post-closing, to memorialize the obligation of the bank’s parent company to support the bank, and to establish a support mechanism in the unlikely event that the bank’s soundness were to deteriorate and the support of the parent company were unavailable,” Alliance added in a press release.
Alliance claims the OCC’s requests are reasonable and that Blackstone has the ability to satisfy them and obtain the required approvals, but that Blackstone has chosen not to do so as part of its apparent business decision not to complete the merger on its terms, if at all.
John Ford, a spokesman for Blackstone, told the Associated Press: “We regret that ADS has felt compelled to file this suit, but we believe it is utterly without merit.”
