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A Delaware judge dismissed Alliance Data Systems Corp.'s (ADS) suit alleging companies formed by Blackstone Group LP breached their contract by failing to go through with a planned merger.

Alliance had sought a $170 million breakup fee, but the judge said Alliance's argument departed "entirely" from the text of the merger agreement.

Specifically, Alliance's contention that Blackstone was aware that the Office of the Comptroller of the Currency was likely to demand that Blackstone make certain commitments to the authority wasn't sufficient, the judge said, as Blackstone wasn't technically a party to the merger agreement. Aladdin, a party to the agreement, did in fact make concessions to the OCC, the judge said.

The judge admonished Alliance, saying there was nothing in the contract that would make Aladdin Solutions Inc. force its parent, Blackstone, to also bend to OCC requirements.

The legal wrangling began early last year, when Alliance sued Blackstone as the hedge fund appeared to be backing away from its offer of $6.4 billion, or $81.75 a share. Alliance had offered to return to the negotiating table to lower the price, but Blackstone declined.

An Alliance representative wasn't immediately available for comment.

Alliance shares on Thursday were down 0.4% to $42.27. The shares hit a 52-week high $68.47 nearly a year ago.

-By Jay Miller, Dow Jones Newswires; 201-938-2331; jay.miller@dowjones.com

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