Blackstone Group To Buy Alliance Data For $7.8 Billion

Private equity's infatuation with the tech industry continued Thursday as an affiliate of the Blackstone Group announced an agreement to buy publicly traded Alliance Data for $7.8 billion.

Under the deal, Blackstone Capital Partners will acquire all outstanding common shares of Alliance Data for $81.75 per share in cash. Alliance Data's board has approved the transaction, which still requires shareholder consent.

In mid-day trading Thursday, Alliance Data shares were selling up 24.4% to $78.35.

Alliance Data offers a range of outsourced business, technology, and marketing services, including payment management services. Its customers include Pfizer, Limited Brands, and Canadian retailer The Hudson's Bay Co.

Alliance Data said it expects its senior management team, including chairman and CEO Mike Parks, to remain in place.

The deal is the latest in a series of transactions that have seen private equity firms buy out or attempt to buy out tech companies.

Outsourcer Affiliated Computer Services is currently the target of a $6.1 billion leveraged buyout offer from Cerberus Capital Management and ACS founder Darwin Deason. In March, Kronos Software, which makes HR applications, said it would be acquired by Hellman & Friedman Capital Partners for about $1.8 billion.

Analysts say private investors covet the steady cash flows some tech companies get from long-term service and support contracts. Private equity firms invested $370 billion overall last year, according to Thomson Financial, twice 2005's level.