Alliance ends acquisition deal, files lawsuit

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Alliance Data Systems Corp. (ADS) has officially terminated its $6.4 billion dollar acquisition agreement with The Blackstone Group and is suing the private equity firm for a $170 million break-up fee.

The two companies have been going back and forth about the May 17, 2007 deal for months. In January, Blackstone gave notice to ADS that it could not get the required approvals from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. ADS countered that the group simply wasn't trying hard enough and filed its first law suit against Blackstone to force the firm's compliance with the agreement. ADS dismissed the suit in February, with Blackstone pledging to explore new ways to close the deal.

Trouble was brewing again in March, when ADS notified Blackstone that it was in breach of contract because the firm had not moved forward in consummating the deal. Things came to a head on April 18 when Blackstone sent a notice to ADS terminating the agreement. ADS did not accept the termination from Blackstone, claiming the company's earlier breach made its claims ineffective, but went on to terminate the merger of its own accord.

“Alliance Data terminated the Merger Agreement because of the Blackstone Entities' repudiation and because these entities refused to timely cure their breaches and perform their covenants and agreements, which breaches and failure to perform caused specified closing conditions not to be satisfied,” read a statement from Alliance.

ADS is eligible for a $170 million business interruption fee in the event of a breach, under terms of the agreement. Because Blackstone denies being in breach, ADS is suing the company for the fee in New York State Supreme Court. ADS is represented by the law firm of Akin, Gump, Strauss, Hauer and Feld, LLP.

Neither firm could be reached for comment as of press time.

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