Card Issuer Alliance Data and Blackstone Talk Options

The takeover of card issuer Alliance Data Systems by Blackstone Group may be closer to closing after a decision by the Office of the Comptroller of the Currency last week, insiders told The Wall Street Journal.

Last May, Blackstone bid $81.75 a share for Alliance Data, a provider of card processing services for more than 85 retailers nationwide. Alliance Data’s World Financial Network National Bank has about $3.9 billion in private-label credit card receivables.

Blackstone had dropped its $6.4 billion purchase in January, claiming as onerous an OCC requirement that Blackstone provide $400 million as a “backstop” if Alliance Data’s bank ran into financial difficulties (“Blackstone Backs Off from Alliance Data Deal,” January 28).

The OCC clarified its approach in a Thursday conference call with Blackstone and Alliance Data, according to the Journal. The OCC will allow Alliance Data to set aside the $400 million in a fund, but if Alliance Data had financial problems that prevented it from providing that backstop, then Blackstone would have to bring the fund up to the $400 million level, unnamed insiders told the Journal.

It wasn’t clear if Blackstone had signed on to the new OCC plan. The bid of nearly $81.75 a share is considerably higher than the $52.22 closing price of Alliance Data on Friday.