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.
Alliance Data, of Columbus, Ohio, said Wednesday that it expects to complete the spinoff of LoyaltyOne by the end of this year through a combination of stock transactions and debt financing.
The move is expected to strengthen Alliance Data’s 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's stock fell in value in the first half of 2020, but in the past few months it has 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 generator is Air Miles, the leading consumer-targeted coalition marketing program in Canada, and BrandLoyalty, a Dutch company that 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,” Ralph Andretta, Alliance Data's president and CEO, said in a press release.
After the separation, the spun-off company will own and operate Air Miles and BrandLoyalty under the leadership of Charles Horn, an executive vice president and senior adviser at Alliance Data, will become CEO of the new unit, ADS said.
LoyaltyOne has more than 1,400 employees and administers loyalty programs in 50 countries, while ADS’s card business alone has more than 6,450 employees, Alliance Data said.
