M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, May 17, 2007

Blackstone Agrees to Acquire Alliance Data

Alliance Data, the marketing services company, today announced an agreement to be acquired by Blackstone.  The transaction is valued at approximately $7.8 billion, and Blackstone will pay $81.75 per share in cash, an approximate 30 percent premium over Alliance Data's closing share price yesterday.  Blackstone's deal comes only one-day after the AFL-CIO sent a letter to the SEC attempting to halt Blackstone's initial public offering; looks like they are continuing on full speed ahead.   

Alliance Data also filed the merger agreement today, an admirable two business days ahead of schedule.  A quick scan finds it to be a pretty clean deal.  No financing provision, a relatively reasonable $170 million termination fee, and no apparent management involvement.  The only question appears to be why, given that this is a cash deal, the parties structured it as a merger rather than a tender offer.  A merger takes two-three months to complete whereas a tender offer takes 20 business days from commencement complete.  In cash deals parties typically prefer the quicker route of a tender offer when they do not have regulatory or other conditions which may require more time to fulfill.  This is particularly true since the deal does not include a "go-shop", a provision which permits the target to undertake market solicitations for a higher offer for a limited period of time after the deal.  I am not  sure of the answer, but I would speculate that the extended provisions in the agreement concerning the marketing of the deal financing likely required more time than the 20 business days a tender offer would take, and so they defaulted into a merger.  Alterntaively, the extended period allowed by a merger here is intended to function as a limited "go-shop" permitting offers to be made without the solicitation aspect.  Please let me know if you have another explanation.



Private Equity, Takeovers, Tender Offer | Permalink

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