Alliance Data Plunges 35%

123jump.com Staff
28 Jan, 2008
New York City

Alliance Data deal with the entities controlled by Blackstone appears to be in jepordy. Allinace had agreed to a deal in May 2007 for a price of $81.75 per share in cash, since then the stock has been cut in half on the weakness in credit market. The stock plunged today after blackstone cited the regulatory hurdle which Alliance believes that the suitor can meet. Alliance board is looking for legal measures to complete the deal.

[R]1:30PM New York – Alliance Data plunged 35% after Blackstone Group cited regulatory hurdles.[/R]

Alliance Data ((ADS)), the credit card payment processor, fell 35% after Blackstone Group said that its purchase of the company for $6.5 billion may not happen.

Alliance Data said in the press release that Blackstone does not anticipate the condition to closing the merger relating to obtaining approvals from the Office of the Comptroller of the Currency (OCC) will be satisfied. The notice was given pursuant to the terms of the May 17, 2007 merger agreement among Alliance Data Systems Corporation and various entities controlled by Blackstone Group.

Alliance Data added in the press release that conditions for merger imposed by the Office of Comptroller can be satisfied by Blackstone and it disagrees with the stated assertion by Blackstone.

Blackstone''s notice did not assert any breach of the merger agreement by Alliance Data or the occurrence or anticipated occurrence of any material adverse effect on the Company, and acknowledged that the Company had, to date, used its """"""""best efforts"""""""" to obtain OCC clearance.

Neither did the notice reference or take issue with the financial or operational performance or liquidity of Alliance Data or its banks, or the parties'' ability to obtain Federal Deposit Insurance Corporation approvals related to the Company''s industrial loan corporation.


[R]12:00PM New York – Merger news dominated early trading in New York.[/R]

New Homes Decline in December

U.S. market average edged higher at mid-day. New home sales, weakness in European and Asian markets, and worries related to the weakness in financial sector dominated trading sentiment.

New home sales in December fell 4.7% from November to annualized rate of 604,000 and November home sales were revised lower to 13% from 9% to 634,000 annual rate.

New home sales declined 41% from a year ago in December, one of the worst declines in a decade. The median home price in December fell 10% to $219,200 from $244,700 in December 2006. For the year 2007, sales declined 26.4% to 774,000 units.

Sales of new homes declined 6.5% in the South, 6% in the West, and 1.2% in the Midwest. In the Northeast sales rose 6% in the month.

CME and Nymex in Preliminary Merger Talks

CME Group, operator of Chicago Mercantile Exchange, and Nymex Holdings Inc, operator of New York Mercantile Exchange, are in preliminary talks to merge.

Nymex is shareholders may receive $36 in cash and 0.1323 of share in CME in exchange of each NYMEX shares.

CME Group expects to maintain trading floors in the New York City metropolitan area. The potential transaction also contemplates that NYMEX will repurchase the 816 New York Mercantile Exchange memberships upon closing of the potential acquisition for an aggregate purchase price not to exceed $500 million.


[R]5:00AM New York, 7:00PM Tokyo- Subprime fears and comments from IMF Chief led Tokyo stocks down 3.97%.[/R]

Stocks in Japan dropped as exporters declined on a strengthening yen and on observations by the IMF that global economic conditions will worsen.

In Tokyo trading Nikkei 225 fell 3.97% or 541.25 to 13,087.91, while the broader Topix Index slumped 51.74 to 1,293.03. Market sold-off after comments from IMF Chief in Switzerland, worsening economic indicators, and worries that the U.S. stimulus package will not be enough to avert a recession in the U.S.

In first section of the Tokyo Stock Exchange 8.3 billion shares valued at 989 billion yen were traded and in the second section 493 million shares valued at 4.7 billion yen changed hands.

Of the Nikkei 225 shares 5 rose, 216 declined, and 4 were unchanged. Dainippon Sumitomo led advancers with a rise of 3.17% followed by Meiji Seika climbing 1.12%.

IMF Managing Director Dominique Strauss-Kahn said at the weekend during a public debate on the global economy at the World Economic Forum in Davos, Switzerland that there was no doubt that “there will be a serious slowdown that will require a serious response”, adding that governments cannot rely on monetary instruments alone to forestall a global economic slowdown.

Just months ago he had said that monetary stimulus will be sufficient and had urged the U.S. to restrain from any fiscal stimulus. His reversal of stance is partly from the worsening credit crisis in the U.S., spreading of American contagion to UK, and persisten choppiness in the global financial markets.

Bloomberg news reported today that Goldman Sachs chief economist in Japan Tetsufumi Yamakawa reported in a research note published today that declining domestic demand and wages, and falling industrial output will lead Japan into a recession.

Tetsufumi added that export shipments to China in the fourth quarter, though expected to offset a shrinking U.S. market, were growing at a much slower pace in volume terms than in the previous quarters.

Japan’s Financial Services Agency announced on its website yesterday that Kanto Local Bureau issued an administrative order against Teramento Corporation requiring it to submit correction of shareholdings reports submitted Friday on securities filings worth 20 trillion yen.

In the filings Teramento Corporation claimed majority shareholdings in Astellas Pharmaceutical Company, Sony Corporation, Mitsubishi Heavy Industry, Toyota Motor Corporation, Fuji Television Network Incorporated, Nippon Telegraph and Telephone Corporation.

Japan’s National Tourist Organization announced today that foreign tourists visiting Japan rose 13.8% from previous year to 8.3 million in 2007 on increasing number of tourists from Asian countries spurred by robust economic growth in the region.

About 2.6 million visitors were from South Korea, 1.3 million were from Taiwan and visitors from China jumped 16.2% from a year earlier to 943,400.

JNTO also added that the number of Japanese traveling abroad fell the most in five years by 1.3% year-on-year to 17 million.

Of the Nikkei 225 index shares Dainippon Sumitomo led advancers with a rise of 3.17% followed by rises in Meiji Seika of 1.12%, in Tokyo Dome Corporation of 0.87%, in Comsys Holdings of 0.36%, and in KDDI Corporation of 0.28%.

Tokyo Dome Corporation gained on Nikkei news online reports that transactions of office buildings and commercial facilities in Japan soared 31% from a year ago to 177 cases in December buoyed by strong demand for properties in the Tokyo metropolitan area from overseas investors.

KDDI Corporation rose after reporting Friday that net profit for the nine months to December rose 12.4% to 214.8 billion from a year ago period.

The company also reported that revenue increased 7.2% for the period under review to 2.64 trillion yen led by a rise of 1.9 million subscribers to its “au” mobile phone service.

KDDI president Tadashi Onodera added that the company now expects a record operating profit of more than 400 billion yen.

Sumco Corporation led decliners in Nikkei 225 stocks with a plunge of 11.46% followed by losses in Fanuc Limited of 9.09%, in Mitsumi Electric Company of 8.85%, in Fuji Electric House of 8.19%, in Mitsumi Engineering & Shipbuilding of 8.17%.

Exporters also fell after the yen gained from 106.72 to 106.08 against the dollar at the close of trade. Canon Incorporated fell 4.94%, Sony Corporation shed 3.52% and Toyota Motor Corporation declined 2.51%.