The Wall Street Journal-20080131-Alliance Data- Blackstone Head to Court Over Buyout

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Alliance Data, Blackstone Head to Court Over Buyout

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Another troubled leveraged buyout is headed to the courts.

Alliance Data Systems Corp. is suing Blackstone Group LP to force the private-equity firm to go through with its $6.4 billion acquisition of the credit-card billing-and-payment processor.

The move follows Blackstone's warning that it probably wouldn't complete the buyout because of conditions imposed by the Office of the Comptroller of Currency, which regulates Alliance Data's credit-card- issuing bank and whose approval is needed before the deal can close.

Alliance Data says the OCC's conditions aren't as unreasonable as Blackstone suggests and believes the regulator would be willing to negotiate further.

"Blackstone failed to use good faith or reasonable best efforts to negotiate" a settlement with regulators, Alliance Data said after announcing the suit, which was filed in the Delaware Court of Chancery.

Blackstone called the suit "utterly without merit."

Alliance Data's shares, down nearly 50% during the past three months as speculation mounted the $81.75-a-share deal wouldn't close, edged down 30 cents to $42.70 in 4 p.m. composite trading yesterday on the New York Stock Exchange.

Separately, Alliance Data posted a 14% drop in fourth-quarter net income amid a loss from selling its mail-service unit. Net income slipped to $33.9 millionr. Revenue rose 15% to $602.7 million.

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Kaja Whitehouse contributed to this article.