Blackstone Backs Off from Alliance Data Deal

The rumors came true today as Alliance Data Systems Corp. reported that Blackstone Group has backed off from its $6.8 billion deal to purchase the card issuer and processor.

Blackstone told Alliance after the market close Friday that the deal was off because Blackstone could not meet approvals from the Office of the Comptroller of the Currency (OCC), according to an Alliance press release today.  

Alliance said that it “strongly disagrees” with Blackstone’s view that the OCC is demanding extraordinary measures be taken by Alliance and Blackstone to complete the deal. Alliance said it also disagreed with Blackstone’s view that the OCC is in its final position on the matter.

Alliance said that it is evaluating its next course of action. Through its World Financial Network National Bank it holds $3.9 billion in private-label credit card receivables for more than 85 merchants.

A number of major buyouts have fallen apart in recent months as credit markets have tightened, including the purchase of SLM Corp., or Sallie Mae., Harman International, and United Rentals.

Blackstone had agreed to pay $81.75 a share for Alliance in M ay 2007. There had been rumors this month that Blackstone and its partner Aladdin Solutions were rethinking the proposal. Alliance Data stock had fallen but the company issued several releases denying the rumors.

Alliance Data stock closed at $65.60 on Friday. This morning the stock was trading at $42.80, down more than 34 percent.