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Alliance Data Systems Corp ADS

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Alliance Data Systems Looks to Increase Focus and Reduce Debt Through a Spin Off of LoyaltyOne

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Alliance Data Systems announced that it intends to spin off its LoyaltyOne segment into a new company. After the spin-off, Alliance Data will be entirely focused on its credit card services and buy now pay later offerings, which generate more than 80% of its current revenue. During the process, Alliance Data expects that the new company will issue debt and use the net proceeds to pay a dividend to Alliance Data, which will use the funds to reduce its own corporate debt. Current shareholders of Alliance Data will receive 81% of the new firm, while the company retains the remainder with the intent being to eventually monetize its position to fund further debt reduction.

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Company Profile

Business Description

Formed by a combination of J.C. Penney’s credit card processing unit and The Limited’s credit card bank business, Alliance Data Systems is a provider of private label and co-branded credit cards, loyalty programs, and marketing services. The company’s most financially significant unit is its credit card business that partners with retailers to jointly market Alliance Data Systems’ credit cards to their customers. The company’s LoyaltyOne division operates the largest airline miles loyalty program in Canada and offers marketing services to grocery chains in Europe and Asia.

3075 Loyalty Circle
Columbus, OH, 43219
T +1 614 729-4000
Sector Financial Services
Industry Credit Services
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 8,000