ADS Takeover Hopes Collapse

Busted merger-arb trade of the day is the acquisition of Alliance Data Systems by Blackstone. Blackstone agreed to pay $81.75 per share for ADS, but the market didn’t believe it: on January 18, ADS shares were trading only at $52.82. And it turns out that the market was right. "Alliance Data Takeover May Collapse" is the Bloomberg headline; ADS shares are now at just $43.08 apiece.

Blackstone is blaming the OCC, of all entities, for scuppering the deal. Details are hard to come by – I don’t quite understand why the OCC is involved at all, let alone demanding "extraordinary" requirements of Blackstone. But I certainly don’t get the impression that Blackstone is particularly upset about this development. In any case, ADS is now trading significantly below the level at which it was valued before the takeover bid. Anybody buying it now is buying the intrinsic value, not some takeover hope.

Update: The problem turns out to be that ADS owns two banks.

This entry was posted in M&A, stocks. Bookmark the permalink.