Wheels Come Off ADS, Blackstone Deal

ADS is suing Blackstone to collect a $170 million business interruption fee since the deal has collapsed.
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Updated from April 20

The proposed marriage of private equity firm

Blackstone

(BX) - Get Report

and credit card services provider

Alliance Data Systems

(ADS) - Get Report

, after a nearly yearlong and often tumultuous engagement, has been officially called off.

Shares of ADS were dropping 7.1% to $49.07 in premarket trading Monday.

Dallas-based ADS issued a statement Friday evening in response to a termination notice it says it received from Blackstone earlier that day. ADS argues that Blackstone has no right to terminate the $6 billion-plus deal to acquire ADS because Blackstone is in breach of the original contract.

"The Blackstone affiliates breached their contractual obligations by, among other things, refusing to accept reasonable and customary regulatory requirements and prolonging negotiations with regulators," ADS said. And having established its case, ADS did the breaking up itself: "For these reasons, Alliance Data today terminated the merger agreement."

ADS, which says it's owed a $170 million business interruption fee in the event of such a breach, is now suing Blackstone again in New York State Supreme Court. It is seeking "full and timely payment of this fee by Blackstone Capital Partners V LP, the guarantor of the fee."

ADS sued Blackstone in January on concerns that the private equity firm might not complete the deal after the Office of the Comptroller of the Currency, a banking regulator,

put conditions on the deal

. But ADS very shortly after

withdrew that suit

.

This article was written by a staff member of TheStreet.com.