Alliance Data Systems v. Blackstone Capital and Aladdin Solutions

Opinion of the Chancery Court in Alliance Data Systems v. Blackstone Capital and Aladdin Solutions


The court dismissed the claim of ADS to claim the $170 million liquidated damages in a failed merger. ADS claimed that Alladin breached its obligation under the merger agreement by failed to reach agreement with the banking regulator, OCC. ADS argued that Alladin failed to cause Blackstone to agree to the demands of the OCC that Blackstone provide financial assurance. Blackstone was not a party to the merger agreement and Alladin had not agreed to cause Blackstone to provide those assurances.

The agreement did provide that Aladdin would ensure that Blackstone not do anything to prevent or delay the merger. There was this negative covenant. But the court found no positive covenant.

Aladdin tried to pull in extrinsic evidence that during the negotiations, the parties discussed the OCC and thought it was likely that the OCC would require financial assurances from Blackstone. The court said ADS should have put that obligation in the merger agreement.

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Reference Info:Decision | State, 3rd Circuit, Delaware | United States

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