Alliance Data Agrees To Be Acquired By Blackstone Group For $7.8 Bln - Update

Alliance Data Agrees To Be Acquired By Blackstone Group For $7.8 Bln - Update



(RTTNews) - Thursday, Alliance Data Systems Corp. (ADS), a provider of loyalty and marketing solutions, said it agreed to be acquired by Blackstone Capital Partners V L.P., an affiliate of The Blackstone Group, for about $7.8 billion, including the assumption of certain debt. Blackstone will pay $81.75 per share in cash, which represents a premium of about 30% over Alliance Data's May 16 closing share price of $62.96.

Following the unanimous recommendation of a special committee, the board approved the agreement and recommended the stockholders to adopt the agreement.

Subject to customary closing conditions and regulatory and stockholder approvals, the deal is expected to close by year-end.

Alliance Data said there is no financing condition to the obligations of Blackstone to consummate the transaction, while equity and debt commitments for the full amount of the merger consideration have been received. It is currently expected that substantially all of the company's outstanding series A and series B senior notes will either be tendered for or repaid in connection with the transaction.

In connection with this transaction, Banc of America Securities LLC and Lehman Brothers, Inc. served as financial advisors to the company and the special committee, and Evercore Group L.L.C. served as financial advisor to the special committee. The company got the legal counsel from Akin Gump Strauss Hauer & Feld LLP, while Kirkland & Ellis LLP served as legal counsel to the special committee.

Credit Suisse Securities (USA) LLC and Blackstone Corporate Advisory Services served as financial advisors to The Blackstone Group, and Simpson Thacher & Bartlett LLP served as its legal counsel.

Last month, the Dallas, Texas based Alliance Data reported that its first quarter net income rose 1% to $56.9 million or $0.70 per share from $56.4 million or $0.69 per share in the prior year quarter.

Cash earnings for the quarter grew 11% to $76.9 million from $69.2 million in the comparable quarter a year ago. On a per share basis, cash earnings were $0.95, up 12% from $0.85 in the similar quarter last year. Total revenues for the quarter advanced 15% to $549.2 million.

For the upcoming second quarter, Alliance Data expects minimum cash earning of $0.80 per share indicating seasonal downturn in private label earnings. Analysts currently expect the company to earn $0.83 per share for the second quarter.

The company's full year cash earnings guidance was indicated to be at least $3.60 per share, up from its prior guidance of $3.55 per share. Street analysts currently expect the company to earn $3.63 per share for the year.

Last year, Alliance Data, through its subsidiary, agreed to acquire to acquire Abacus fro about $435 million cash. The deal bought Abacus solutions' 80+ private label credit card retail clients.

The proposed acquisition of Alliance Data is the latest in the string of private equity deals.

Yesterday, Data management firm Acxiom Corp. (ACXM) said it agreed to be bought by investment firms Silver Lake and ValueAct Capital in all cash deal valued at $3.0 billion, including the assumption of about $756 million of debt. Under the terms of the deal, Acxiom shareholders will receive $27.10 in cash for each share held.

Also, yesterday, eye health company Bausch & Lomb Inc. (BOL) revealed an agreement to be acquired by affiliates of private equity firm Warburg Pincus in a transaction valued at about $4.5 billion, inclusive of approximately $830 million of debt. Under the terms of the deal, affiliates of Warburg Pincus will acquire all the outstanding shares of Bausch & Lomb common stock for $65.00 per share in cash.

Early April, First Data Corp. (FDC), a provider of electronic commerce and payment services and a competitor of Alliance Data, also agreed to be acquired by an affiliate of private equity firm Kohlberg Kravis Roberts & Co. or KKR for about $29 billion in cash, or $34 per share. The deal is expected to close by the end of the third quarter of 2007.

Blackstone Group-Profile

Blackstone is managing over $32.4 billion through its Blackstone Capital Partners I, II, III, IV, and V and Blackstone Communications Partners funds. Blackstone has invested in over 100 companies and the total enterprise value of all transactions effected up to December 31, 2006 is over $191 billion.

Recent deals by Blackstone Group

Last month, Blackstone bought Pharmaceutical Technologies and Services segment from Cardinal Health (CAH) for approximately $3.3 billion.

Last December, Biomet, Inc. (BMET) a maker of musculoskeletal medical products, agreed to be acquired by a private equity consortium in a transaction with a total equity value of approximately $10.9 billion, or $44 per share. The consortium included affiliates of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG.

Also in December, Freescale Semiconductor merged with an entity controlled by a consortium of private equity funds led by The Blackstone Group and including The Carlyle Group, funds advised by Permira Advisers LLC and Texas Pacific Group in a $17.6 billion deal.

Stock Quote

On the takeover news, Alliance Data shares are soaring 24.57% or $15.47 and currently trading at $78.43, a new-52-week high for the stock. For the past one-year, Alliance Data shares are trending between $47.45 and $68.10. The stock is currently trading on a volume of more than 14.14 million shares, compared to a 3-month average volume of 1.06 million shares.

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