Alliance Data Systems, which operates private-label and cobranded credit card and loyalty programs, plans to spin off its loyalty operations this year to improve the parent company’s performance.
The Columbus, Ohio-based ADS expects to complete the spinoff of LoyaltyOne by the end of this year through a combination of stock transactions and debt financing, the company said in a Wednesday press release.
The move is expected to strengthen ADS’ balance sheet and improve key ratios, according to the release. ADS, which has heavy exposure to the apparel industry through its credit card portfolios, generated $3.8 billion in revenue last year. The company saw its stock value decline in the first half of last year and during the last few months, it’s climbed back to near pre-pandemic levels.
LoyaltyOne produced $765 million in revenue last year and adjusted EBITDA of $186 million. The unit’s biggest revenue comes from Air Miles, the leading consumer-targeted coalition marketing program in Canada, and Netherlands-based BrandLoyalty, which provides consumer marketing programs for grocers in various global regions.
“We are confident that this transaction, once completed, will provide distinct benefits to each company, enhancing the businesses’ ability to execute against their respective strategic priorities,” said Ralph Andretta, ADS’ president and CEO, in the release.
After the separation, the spun-off company will own and operate Air Miles and BrandLoyalty under the leadership of Charles Horn, currently an executive vice president and senior adviser at Alliance Data, will become CEO of the new unit, the press release said.
LoyaltyOne has more than 1,400 employees and administers loyalty programs in 50 countries, while ADS’ card business alone has more than 6,450 employees, according to the release.
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May 13, 2021 at 01:21AM
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Alliance Data to spin off loyalty unit that operates Canada's Air Miles - PaymentsSource
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